The Late Payments in Commercial Transactions Law, Law 123(I) of 2012, published on the 27.12.2012, repeals the previous legislation regarding late payments in commercial transactions.
The purpose of this new legislation is to give legal effect to Directive 2011/07/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions. The Directive repealed, with effect from 16 March 2013, an earlier Directive from 2000 (Directive 2000/35/EC) on combating late payment in commercial transactions.
The new legislation passed applies equally to the public and private sectors and provides an entitlement to interest if payment for commercial transactions is late.
The main provisions of the revised legislation are:
- Invoices must be settled no later than 30 days after receipt of the goods or services or the relevant invoice, whichever is the later. The 30 day term can be contractually extended for up to a further 30 days, although any extension of the term for payments by a public authority must be expressly agreed and objectively justified in the light of the particular nature or features of the contract, and in any event cannot exceed 30 days.
- Unless otherwise specified in an agreed contract, the interest rate will be the European Central Bank main refinancing rate (as at 1 January and 1 July in each year) plus 8 percentage points. The ECB rates in force on 1 January and 1 July apply for the following six months in each year. Only one rate will apply to a late payment – that is the rate in force on the payment date.
- Any contractual terms which are considered as abusive will not be binding.
- Contractual terms which preclude interest for late payment or recovery of debt collection costs are automatically deemed to be abusive.
- The new law recognizes retention of title clauses.
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Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.