Keywords: bill, shorten payment terms, 30 days, SMEs.
The bill to shorten the maximum statutory payment terms from large companies to small and medium-sized companies (SMEs) to 30 days has been passed by the House of Representatives.
The rules regarding payment terms for the government, non-professional organizations and companies have been further tightened with Directive 2011/7/EU (the second payment terms directive). The basic principle remains that invoices must in principle be paid within 30 days. The payment term of 30 days is limited to a maximum of 60 days. A contractual payment term of longer than 60 days can only be legally agreed if this is expressly included in the agreement and there is no obvious unfairness towards the creditor. Directive 2011/7/EU does not distinguish between different size classes of companies.
The main rule of paying invoices within 30 days is included in Article 6:119a paragraph 2 of the Dutch Civil Code. Companies can mutually agree on a longer term. For large companies that have SMEs as creditors, they can agree on a payment term of a maximum of 60 days (Article 6:119a paragraph 6 of the Dutch Civil Code).
Practice has shown that payment terms are often longer than 30 days, so that a payment term of 30 days is the exception rather than the rule. SMEs are experiencing difficulties due to late payments.
The bill provides that large companies with SMEs (including small self-employed) cannot agree on a payment term longer than 30 days. If these parties agree on a term that is longer than 30 days, that agreed payment term is null and void and a payment term of 30 days applies by operation of law. This ground for invalidity is already regulated in the existing Article 6:119a paragraph 6 of the Dutch Civil Code. This bill only changes the maximum allowable payment term from 60 to 30 days. If large companies pay an invoice submitted after more than 30 days, they will automatically owe statutory commercial interest over the term that exceeds the 30 days. Pursuant to the current article 3:307 paragraph 1 of the Dutch Civil Code, the obligation for a customer to pay statutory interest is enforceable for a period of five years after the claim has become due and payable. In this way, suppliers (SMEs) that have a dependent relationship with a customer (large company) are enabled to claim back statutory interest for up to five years after the agreement has been terminated.
The adjusted payment deadline of 30 days will apply to new agreements immediately after entry into force. A transitional period of one year will apply to existing agreements, which means that current agreements do not have to be amended immediately when this bill enters into force.
Entrepreneurs in small and medium-sized enterprises (SMEs) can anonymously report late payments up to and including 26 January 2023 to the temporary Reporting Center Overdue Payments, which the Netherlands Authority for Consumers and Markets (ACM) set up in January 2021.
In case of questions, please feel free to contact NAZALI nazali_amsterdam@nazali.com).
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NAZALI TAX & LEGAL |