Today, the European Commission decided to refer Belgium, Greece and Italy to the Court of Justice of the European Union (‘Court of Justice’) for not correctly applying the rules under the Late Payment Directive (Directive 2011/7/EU).
The Late Payment Directive obliges public authorities to pay their invoices within 30 days (or 60 days for public hospitals). By sticking to these payment deadlines, public authorities set an example in the fight against bad payment culture in the business environment.
Late payments have negative effects on businesses, by reducing liquidity, preventing growth, hampering resilience and potentially impeding their efforts to become greener and more digital. In the current economic context, businesses, and in particular SMEs, rely on regular payments to operate and keep employment.
The Commission is referring Belgium to the Court of Justice due to late payments by public authorities, in particular those of Wallonia. Following the launch of the procedure in 2019, the Commission has monitored the situation closely through an extensive monitoring process run over the last two years but finds that insufficient improvement has been made to date.
In the case of Greece, the Commission is referring it to the Court of Justice due to excessive payment delays by public hospitals (both civil and military) to their suppliers. The Commission launched the infringement procedure in 2019. These excessive payment delays by public hospitals hamper the competitiveness and resilience of businesses working in the health sector, especially SMEs. Under COVID-19, these businesses have played a crucial role in quickly supplying hospitals, helping them stay operational. The Commission also decided today to send a reasoned opinion to Greece in a separate case (INFR(2023)2027), under the Late Payment Directive – this separate case concerns the issue of waivers signed by hospital contractors, agreeing to waive their rights under the directive against promises of immediate payments.
The Commission is also referring Italy to the Court of Justice due to a national law and practice excluding the rental of wiretapping equipment for criminal investigations from the scope of the Late Payment Directive. The exclusion means that suppliers of those services are not guaranteed payment within the statutory deadlines, and are prevented from enforcing their rights under the Directive. The infringement procedure was launched in 2021. However, Italy has still not put forward any amendment to bring its law and practice in compliance with the Directive.
Background
Late payment causes administrative and financial burdens, which are particularly acute for SMEs, and when businesses and customers are in different EU countries. Cross-border trade is inevitably impacted. To address this, the EU adopted Directive 2011/7/EU on combating late payment in commercial transactions in February 2011. The Directive puts in place strict measures which, when properly implemented by EU countries, contribute significantly to employment, growth and an improvement in the liquidity of businesses.
Member States have a special responsibility in ensuring that public authorities pay on time the goods and services that they procure. The Commission supports Member States in enforcing more effectively the Directive’s provisions, including making available stronger monitoring and enforcement tools. The Commission is currently setting up a European Observatory of payments in commercial transactions as announced in the Update to the Industrial Strategy adopted in May 2021.
In addition, the Commission also presented a revision of the Late Payment Directive. This revision is part of a series of initiatives to address the needs of SMEs, as announced by the President of the Commission in the State of the Union 2022. The revision aims to address the regulatory shortcomings and gaps, foster more timely payments and bring better balance between large and small operators. As a result of the revision, the Commission adopted a proposal for a Regulation on combatting late payments in commercial transactions in September this year.
For More Information
Proposal for a Regulation for combatting late payment in commercial transactions Questions and answers on the proposal for a late payment Regulation
Infringement decisions database
Link to November 2023 infringements package
Infringement decision against Belgium (INFR (2019)2299)