Subject: Failure to comply with the Late Payment Directive and future revision of the directive
Timely payment of goods and services acquired by national governments is essential to keep the economy working properly, ensure businesses remain solvent and defend the integrity and competitiveness of the internal market. Against a backdrop of post-pandemic economic recovery, soaring inflation rates and the consequences of the war in Ukraine, businesses whose goods or services have been acquired – especially small and medium-sized companies – must be paid on time to support the economy.
The Late Payment Directive1 is an important instrument and the Commission is set to revise it2. Regrettably, 60 % of European companies are not paid on time; there are some particularly bad examples, including Portugal, which is currently the subject of infringement proceedings3.
1. How does the Commission view late payments in Europe and their impact on the economy?
2. What conclusions has the Commission drawn for the revision of Directive 2011/7/EU?
3. What justification has the Portuguese Government supplied, if any, for not applying the directive in question?
Submitted:3.7.2023
1 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late
payment in commercial transactions (recast), available at https://eur-lex.europa.eu/legal- content/EN/TXT/?uri=CELEX%3A32011L0007.
2 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13665-Late-payments-update-of-EU-
rules_en
3 INFR(2017)2037
Answer given by Mr Breton on behalf of the European Commission
(16 October 2023)
Late payments in commercial transactions affect the growth and survival of businesses, accounting for one out of four bankruptcies in the EU and hampering the twin transition of enterprises. For example, in Portugal, only 21% of payments between business are made on time (4).
The Late Payment Directive (5) has proven inadequate to protect businesses, especially small and medium-sized enterprises (SMEs), against late payments.
Key gaps identified are the absence of effective enforcement tools, redress mechanisms easily accessible to SMEs, and a maximum payment term in transactions between businesses (6).
To combat late payments, Europe needs stronger measures. This is why the Commission proposed on 12 September 2023 a new Regulation (7) combatting late payments, with clear caps for payment deadlines, effective enforcement and redress measures, and a list of unfair payment practices and clauses.
The Commission opened an infringement procedure against Portugal in 2017 due to excessive payment delays from the public administration (8).
The Commission has had a constant dialogue with the Portuguese authorities and monitored the situation closely, but found that insufficient improvement has been made, in particular in the two autonomous regions Azores and Madeira.
1 ∙ ⸱ Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast),
available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32011L0007. 2 ∙ ⸱ https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13665-Late-payments-update-of-EU-rules_en 3 ∙ ⸱ INFR(2017)2037 4 ∙ ⸱
Dun & Bradstreet Payment Study 2023. Figure refers to Q4 2022. On average, Portuguese businesses spend 75 days of their working year chasing debtors (INTRUM, European Payment Report 2023). 5 ∙ ⸱
Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast) Text with EEA relevance, OJ L 48, 23.2.2011, p. 1; https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32011L0007 6 ∙ ⸱ Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast) Text with EEA relevance, OJ L 48, 23.2.2011, p. 1; https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13665-Late-payments-update-of-EU- rules_en 7 ∙ ⸱
https://single-market-economy.ec.europa.eu/publications/proposal-regulation-combating-late-payment-commercial-transactions_en 8 ∙ ⸱ INFR(2017)2037.
| | ) It therefore decided (9) to refer Portugal to the Court of Justice of the European Union in April 2023.
9 ∙ ⸱ https://ec.europa.eu/commission/presscorner/detail/EN/IP_23_2133 | | ( | | )