10.4% EU Rate: Interest on Overdue Invoices by Country 2026 [Data]

Businesses in the European Union can charge 10.4% annual interest on a late B2B invoice in the second half of 2026, the European Central Bank’s reference rate plus the 8-point margin the EU’s Late Payment Directive requires, according to Ireland’s Department of Enterprise, Trade and Employment. That rate is set by law and applies automatically, no lawsuit or demand letter needed. Most of the rest of the world works nothing like it: the UK, US, Australia, and Canada each treat overdue-invoice interest differently, and in three of those four countries there is no statutory rate at all for private contracts.

What Interest Rate Applies to Overdue Invoices in the EU?

10.4% a year, for any qualifying B2B invoice that becomes overdue between July 1 and December 31, 2026. The rate is set under EU Directive 2011/7/EU and calculated the same way across every member state: the European Central Bank’s main refinancing rate, 2.40% as of July 1, 2026, plus a fixed 8 percentage point margin, recalculated every six months. Interest starts accruing automatically the day after the due date, no invoice or reminder needs to mention it for the right to exist.

Figure 1: The EU’s statutory late-payment interest rate for the second half of 2026, set under Directive 2011/7/EU. Source: Ireland Department of Enterprise, Trade and Employment.

The rate isn’t the only automatic entitlement. A supplier is also owed a flat 40 euro minimum compensation payment on top of the interest, payable the moment payment is late, plus any further reasonable recovery costs actually incurred beyond that. Together, the interest and the flat fee mean a business chasing a late invoice in the EU is recovering something close to its real cost of being unpaid, not just a symbolic penalty.

What Can UK Businesses Charge on a Late Invoice?

11.75% a year, for invoices that became overdue in the first half of 2026. The Late Payment of Commercial Debts (Interest) Act 1998 sets the rate at the Bank of England base rate plus 8 percentage points, fixed twice a year using the base rate in force on the preceding June 30 or December 31. With the base rate at 3.75% at the end of 2025, that puts the statutory rate at 11.75% for invoices overdue between January and June 2026.

The UK’s fixed compensation works differently from the EU’s flat 40 euros: it scales with the size of the debt. A debt under 1,000 pounds carries a 40 pound fixed fee, a debt between 1,000 and 9,999.99 pounds carries 70 pounds, and anything 10,000 pounds or more carries 100 pounds, on top of the statutory interest itself.

Figure 2: The UK’s fixed compensation for a late commercial debt scales with the size of the invoice, unlike the EU’s flat fee. Source: Late Payment of Commercial Debts Regulations 2002.

Does the US Have a Statutory Interest Rate on Overdue Invoices?

Not for private B2B invoices, no. There is no federal law setting a default interest rate a business can charge another business for a late payment; that leaves it to whatever the contract or invoice states, and to whichever state’s default legal rate of interest applies when nothing was agreed, typically somewhere between 5% and 12% a year. The one federal rate that does exist, under the Prompt Payment Act, governs only what the federal government owes its own contractors when it pays late, and that rate is a modest 4.75% for the second half of 2026, per the US Treasury.

In practice, most US invoices that state a late-payment rate at all converge on a market convention rather than a legal default: 1.5% a month, roughly 18% a year, a figure old enough that a handful of states, Georgia among them, have written it directly into commercial statute as a presumed rate when nothing else is specified.

Figure 3: The US market convention on a stated late-payment rate runs far above what the federal government itself pays its own late contractors. Source: US Treasury; state statute compilations.

What About Australia and Canada?

Neither country has a single national statutory interest rate for private B2B invoices, and both leave the rate to the contract by default. Australia’s closest thing to a benchmark is Victoria’s court-set penalty interest rate, fixed under the Penalty Interest Rates Act 1983 and unchanged at 10% since February 2017, per the Supreme Court of Victoria. It’s a judgment-debt rate rather than a private invoicing statute, but law firms and invoicing guides commonly point to it, alongside a broader commercial range of roughly 8% to 15% a year, as the reasonable ballpark for a stated late-payment clause.

Canada is similar: no federal or provincial statute sets a default commercial rate, though a handful of provinces regulate prompt payment and interest specifically for the construction industry, and the federal Interest Act requires that whatever rate a business does state be expressed on an annualized basis, not buried as an unexplained monthly percentage. Outside construction, a commonly cited commercial range is 1.5% to 4% a month, again set by contract rather than by law.

Figure 4: Statutory rates in the EU and UK sit within a few points of the market conventions used where no statute applies. Source: Ireland DETE; legislation.gov.uk; US Treasury; Supreme Court of Victoria.

Why Do So Few Businesses Actually Charge It?

Because the legal right to charge interest and the practice of actually collecting it are two different things, and most small businesses skip the second part. 59% of small businesses were carrying invoices at least 30 days overdue in 2026, up from 47% a year earlier, with an average of $17.7K sitting unpaid at any given time, according to Intuit QuickBooks’s 2026 Small Business Late Payments Report. Very few of those businesses are pursuing statutory interest on that balance; chasing a formal interest claim takes more administrative effort than most owe-you-money situations are worth, especially against a client the business wants to keep.

Figure 5: More than half of small businesses are now carrying invoices past the 30-day-overdue mark. Source: Intuit QuickBooks, 2026 Small Business Late Payments Report.

What does move the needle is simply stating that interest or a late fee could apply, separate from ever formally charging it. FreshBooks’s analysis of more than 1 million small business invoices found that invoices carrying a stated late-fee or “Interest” note are paid 92.15% of the time, well above the 78.62% baseline for invoices with no special wording at all, a gap covered in full in BillyPaid’s friendly-vs-firm wording data. The number on the invoice matters less than the fact that a number is there at all, and that a business that leaves every invoice completely uncontacted, 31% of businesses do, never even gets the chance to find out.

That is exactly the gap BillyPaid’s payment reminders are built to close: a seller can configure a late-fee type and amount that shows on the invoice itself and on every overdue reminder email, describing the interest or fee that legally applies in their jurisdiction, without needing to manually track EU, UK, or state-by-state rates invoice by invoice. That messaging is informational, not automatic. BillyPaid never adds the configured fee as a new line item onto an invoice that has already been issued; a seller who wants to actually apply it issues a new invoice or credit note themselves. For the full picture of how much a business can charge state by state and country by country once it decides to formalize a fee, see how much late fee you can charge.

Interest on Overdue Invoices by Country: The Data Side by Side

Country	Basis for the Rate	Rate or Fee	Source of Authority
European Union	Statutory, ECB rate + 8 pts	10.4%/yr + 40 EUR minimum	EU Directive 2011/7/EU
United Kingdom	Statutory, BoE base rate + 8%	11.75%/yr + 40-100 GBP tiered	Late Payment of Commercial Debts Act 1998
United States	No federal statute; market convention	~18%/yr (1.5%/mo) common	State law / contract terms
Australia	No national statute; court benchmark	10%/yr (Victoria) benchmark	Penalty Interest Rates Act 1983 (Vic)
Canada	No federal statute; contract-set	1.5%-4%/mo common range	Interest Act (annualized disclosure only)

The Bottom Line

The right to charge interest on a late invoice is not a universal fact of doing business, it’s a legal patchwork. The EU and UK bake it directly into statute, set it automatically, and top it with a fixed compensation fee that applies whether or not a business ever mentions it. The US, Australia, and Canada leave it almost entirely to the contract, with courts and practitioners offering benchmarks rather than legislatures setting defaults. A business selling across borders needs to know which regime its invoice falls under before it states a rate, since 11.75% is accurate and enforceable in the UK and simply invented in most of the US.

What matters more day to day, regardless of jurisdiction, is that stating a rate at all changes behavior. FreshBooks’s data shows a paid-rate lift of roughly 14 percentage points just from adding wording, statutory or not, and BillyPaid’s payment reminders exist to make sure that wording, and the follow-up behind it, happens on every invoice rather than only the ones a business remembers to chase.

Frequently Asked Questions

What is the interest rate on overdue invoices in the EU in 2026? 10.4% per year for invoices overdue between July 1 and December 31, 2026, made up of the European Central Bank’s 2.40% main refinancing rate plus the 8 percentage point margin required by EU Directive 2011/7/EU, according to Ireland’s Department of Enterprise, Trade and Employment. A flat 40 euro minimum compensation applies automatically on top of that interest.

Can UK businesses charge interest and a fee on a late invoice? Yes. The Late Payment of Commercial Debts (Interest) Act 1998 sets statutory interest at the Bank of England base rate plus 8 percentage points, 11.75% for invoices overdue in the first half of 2026, plus a fixed compensation fee of 40, 70, or 100 pounds depending on the size of the debt.

Is there a federal law setting interest on late B2B invoices in the US? No. There is no federal statute governing interest on private business-to-business invoices in the US. The federal government’s own Prompt Payment Act rate to its contractors is 4.75% for the second half of 2026, well below the roughly 18% a year, 1.5% a month, that is common market convention on private invoices.

Does BillyPaid automatically add late fees or interest to overdue invoices? No. A seller can configure a late-fee type and amount, and that shows as a stated note on overdue-invoice reminder emails and on the invoice itself, so a seller quoting the UK’s 11.75% statutory rate or a flat fee is describing it accurately. BillyPaid never adds that fee as a new line item onto an invoice that has already been issued.

Sources and References

1. Ireland Department of Enterprise, Trade and Employment, Late Payment Interest Rate (2026)
2. UK Legislation, The Late Payment of Commercial Debts Regulations 2002
3. US Department of the Treasury, Bureau of the Fiscal Service, Prompt Payment Interest Rate (2026)
4. Supreme Court of Victoria, Penalty Interest Rates
5. Intuit QuickBooks, 2026 Small Business Late Payments Report
6. FreshBooks, Small Business Invoice Wording and Payment Terms Analysis (1M+ invoices, 2026)
7. Sprintlaw, Late Payment Interest in Australia: How to Charge It Legally
8. PaidNice, How Much Can I Charge for Late Fees in Canada

Note: All figures verified as of October 2026.