Brussels, 07/04/2009 (Agence Europe) - EU Enterprise Commissioner Günter Verheugen will unveil draft legislation on Wednesday 8 April 2009 to amend Directive 2000/35/EC on payment deadlines, which has been called for by European small and medium-sized enterprises (SMEs) since 2004 (see EUROPE 9862). Announced in the Small Business Act for Europe, the legislation introduces a maximum deadline of 30 days for payments made by public bodies in Europe. For any commercial transaction, companies owed money will be entitled to compensation for administrative costs arising from late payments. These measures would come into force a year after the directive is adopted and have been welcomed by bodies representing SMEs, although they wanted the European Commission to do more to help.
Since August 2002, Directive 2000/35/EC has covered payment deadlines in commercial transactions. It introduces the right to charge interest for late payments when a company has not been paid within a certain deadline after the date of receipt of the invoice or after completion of the work covered by the contract in question. Both parties to a contract decide in agreement with each other how long this deadline should be. If the contract does not include any such clause the directive foresees that a default deadline of thirty days shall apply.
The Commission suggests introducing an article on payments made by public bodies for work carried out under public tender contracts. The general rule is that the authorities should have up to thirty days to pay their suppliers. According to a draft seen by EUROPE, however, a longer deadline can be set as long as (1) the decision is taken in common agreement between the invoicer and invoicee and (2) the extension must be “duly justified in the light of particular circumstances such as an objective need to schedule payment over a longer period”. A European official feared that the document left Member States too much freedom because public bodies and SMEs are not on an equal footing. The official said that while a longer deadline than thirty days could be set in certain circumstances, it would be better to introduce a second maximum, which he suggested could be sixty days. The draft legislation does not give any examples of situations where longer deadlines would be appropriate. Whatever deadline is set, a bidder who is not paid on time would be entitled to damages of 5% of the total contract.
Another new introduction in the draft legislation is that companies and economic operators could be given compensation for administrative costs related to late payment. The Commission suggests that the compensation should be the equivalent of a set change of €40 if the amount due is less than €1000, and €70 for amounts of between €1000 and €10,000, and 1% of the amount due if the invoice due is above €1000. Other measures improve information about what SMEs are entitled to under the legislation. (M.B. trans fl)