In September 2023, the EU Commission presented a legislative proposal to combat late payments in business transactions between companies, aiming to replace the existing EU directive from 2011. Key measures included a strict limitation of legally permitted payment terms to 30 calendar days and an “automatic” late payment surcharge of 8% p.a. above the ECB’s reference rate. Member states were to be required to establish additional regulatory institutions alongside their national judiciary for monitoring and enforcement.

Even before the proposal was addressed in the European Parliament, there was significant resistance from numerous EU member states. Consequently, the permitted payment terms were extended to 60 days or, in certain cases, to 120 days. This flexibility means no change to the status quo for most companies.

However, strong concerns at the member state level remain unchanged. Following the ratification of the modified proposal by the European Parliament in April, a group of 14 member states reiterated their position in unusually strong terms, stating that they remain unconvinced of the need to amend the 2011 directive, reject further negotiations, and have referred the matter back to the EU Commission for fundamental revision.

This group holds sufficient weight within the European Council to block the necessary approval for an EU legislative proposal. Therefore, it currently seems unlikely that this initiative will be implemented in its present form.