A judgement of the Court of Justice of the European Union of 20 October 2022 (C-585/2020) clarifies certain aspects regarding the creditor’s right to be compensated for the late payment of invoices, as well as the calculation of interests on arrears.

The analysed case concerns a Spanish company that acquired receivables from several companies to be paid by the Administration of the Autonomous Community of Castile and Leon for the provision of services in the health sector. The invoices fell due and were not paid.

The acquiring company claimed default interest and 40 Euros in collection costs from the debtor for each unpaid invoice. In view of the lack of payment, the creditor filed a contentious-administrative appeal before the Administrative Court of Valladolid, which suspended the proceedings and referred several questions to the Court of Justice of the European Union for a preliminary ruling:

  • The first was whether the 40 Euros are per invoice as long as the creditor has separately identified the invoices in his claims or whether they are per invoice in any case.

The answer is that article 6 of Directive 2011/7 cannot be invoked to limit the creditor’s right to receive the fixed amount per unpaid invoice, even if the creditor has claimed all the amounts in a single claim. The Court recalls that the purpose of the Directive is to discourage non-payment and that the limitation of recovery to 40 Euros for a set of several unpaid invoices would constitute a dispensation in favour of the debtor of the right to the fixed sum provided for in article 6.

  • The second question was regarding the calculation of the payment period.

This part of the Court’s ruling affects the interpretation of article 198 (in relation with article 210) of Law 9/2017 on Public Sector Contracts in such a way  that the payment period is 30 days from the date of approval of the work certifications or conformity with the goods delivered or services provided, taking into account that article 210 provides for a period of one month for the Administration to carry out the formal act of establishing conformity. The combined application of both articles implies, as a general rule, a total payment period of 60 calendar days.

The Court of Justice examines whether the provision of Spanish law, which establishes a payment period of a maximum duration of 60 calendar days between companies and public authorities, consisting of an initial period of 30 days for the procedure of acceptance or verification of the conformity with the contract of the goods delivered or services rendered and an additional period of 30 days for the payment of the agreed price, is in conformity with Directive 9/2017.

Article 4(3)(a) of Directive 2011/7 provides that States must ensure that the time limit for payment where the debtor is a public administration is 30 days. This period is the general rule and only allows for one exception, namely where the contract provides for a period of acceptance or verification of the goods or services delivered, in which case the period begins on the date on which acceptance takes place. However, this additional verification period must be justified by the characteristics of the contract and may in no case exceed 30 calendar days.

Therefore, the legislation of a Member State providing for a payment period of a maximum duration of 60 calendar days in transactions between undertakings and public administrations is only permitted if it complies with the requirements mentioned in the previous paragraph.

  • And thirdly, whether the VAT amount of the invoices is included in the base amount of the debt for the calculation of the interest for late payment.

Article 2.8 of Directive 2011/7 includes the expression “including tax”, which implies that the amount owed must necessarily include the amount of VAT on the invoice claimed, regardless of the methods of payment or the time of payment of the VAT by the taxable entity to the tax authorities. Therefore, the concept of ‘amount due’ does not make any distinction in terms of the date on which the taxable entity fulfils the VAT payment obligation or in terms of the methods of payment provided for by law.

 

Eduardo Vilá

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

11th of November 2022