The interest rate in the event of late payment in commercial transactions has decreased to 12.25 per cent as from 1st July 2024.
The rate was previously set at 12.5 per cent – the highest ever – with the latest update reflecting the European Central Bank’s decision in June to cut its core interest rates.
The change was announced by the Malta Association of Credit Management (MACM), a non-profit organisation for the promotion and protection of all credit interest pertaining to Maltese businesses.
The applicable late payment interest rate applies from the day following the end of the term agreed in the contract of sale.
When the payment terms are not specified in the contract of sale, the supplier of goods and services (the creditor) is entitled to interest on late payment following 30 calendar days from the date of receipt of goods or services, or 30 days from the date of invoice.
Interest accrues daily.
Late payments remain a major issue for European and Maltese businesses, leading to cash flow issues that may lead to insolvency.
The EU’s Late Payment Directive is currently being revised, and may see the introduction of a number of new measures including mandatory term limits for payments in a bid to counter the unequal power relationship between buyers and sellers.
Other conditions relating to the interest chargeable for late payment in commercial transactions are:
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