Late Payment of Commercial Debts in Ireland: What the Regulations Say

When one business pays another late, Irish law gives the supplier a right to interest and a fixed sum for recovery costs without having to send a reminder. This guide explains late payment interest on commercial debts in Ireland as set out in the European Communities (Late Payment in Commercial Transactions) Regulations 2012 (S.I. No. 580 of 2012) and in the Department of Enterprise's guidance. It is aimed at finance and credit-control teams, including those in Dublin, who chase invoices or who pay suppliers. See also our overview of finance training courses in Dublin.

This article is general information, not legal advice. The Department of Enterprise's own page makes the same point and recommends consulting qualified legal professionals for specific interpretations.

Which law applies

The Department of Enterprise page "Late Payment in Commercial Transactions" says the subject is governed by S.I. No. 580 of 2012, as amended by S.I. No. 74 of 2013, S.I. No. 196 of 2014 and S.I. No. 281 of 2016, which give effect to the EU late payment directive. It states that the regulations apply to commercial transactions in both the public and private sector, and that late payment interest is an implied term of every commercial transaction. The page does not show a last-updated date.

On the Irish Statute Book, the 2012 Regulations say they come into operation on 16 March 2013 and apply to payments made as remuneration for commercial transactions. A commercial transaction is defined as one between businesses, or between a business and a public authority, involving goods or services supplied for payment. An "undertaking" is a person acting in the course of independent economic or professional activity.

When is a payment "late"?

The Regulations define late payment as payment not made within the contractual or statutory period of payment, where the supplier has met its own obligations and has not received the amount due on time, unless the purchaser is not responsible for the delay.

The default payment date

Where the contract sets a payment date or period, that applies. Where it does not, the Regulations' definition of "relevant payment date" falls back to 30 calendar days after receipt of the invoice. If the invoice date is uncertain, or the invoice arrives before delivery, the 30 days run from delivery or service. Where an acceptance or verification procedure applies and the invoice is received on or before it, the 30 days run from that procedure.

Longer periods and public bodies

The 2016 amendment (S.I. No. 281 of 2016) replaced part of the definition. As amended, a payment date or period of more than 60 calendar days between businesses must be expressly agreed in the contract and must not be grossly unfair to the supplier. Where the purchaser is a public authority, the date or period "shall not exceed 30 calendar days". The Department's page repeats this: public authority contracts cannot exceed 30 days from delivery, and a business-to-business date beyond 60 days must be expressly agreed and not grossly unfair.

Interest: when it starts and what rate applies

Under the Regulations, interest is an implied term of every commercial transaction. If the purchaser does not pay by the relevant payment date, the supplier can claim interest without sending a reminder. Interest runs from the day after the relevant payment date until the amount is paid. The supplier must have met its contractual and legal obligations, and the purchaser must not be free of responsibility for the delay.

Unless the contract says otherwise, the rate is the European Central Bank's most recent main refinancing rate plus 8 percentage points. The reference rate resets on 1 January and 1 July. The Department's page "Late Payment Interest Rate" shows a rate of 10.4% per annum effective 1 July 2026 (the ECB rate of 2.40% plus 8%), and a table of earlier periods. Because the rate changes every six months, always take the figure from the current page.

A worked example

The Department's FAQ on calculating interest gives the method: multiply the amount of the debt by the number of days late, then by the daily rate, using the rate in operation on the date the payment became overdue. Its example is a €1,000 debt paid 25 days late at 10.4%, which works out as 1,000 x 25 x (10.4% / 365) = €7.12. The page also points to an interest calculator on the EU's Your Europe website.

Compensation for recovery costs

When interest falls due, the supplier is also entitled to a fixed sum as compensation for recovery costs, again without a reminder. The Department's page "Compensation for Recovery Costs" lists the fixed amounts payable under Regulation 9 by invoice value:

The Regulations also allow a supplier to claim reasonable additional compensation for recovery costs above the fixed sum, such as lawyers' or debt collectors' fees, and say the supplier does not have to prove the costs covered by the fixed sum. The compensation page shows no date, so confirm the amounts on the day you rely on them.

What is outside the Regulations

The Regulations list several exclusions. They do not apply to contracts made before 16 March 2013, to transactions with consumers (a natural person acting outside their trade, business or profession), to debts subject to insolvency proceedings, or, subject to a further provision, to debts that already carry interest under another Act or rule of law. If you are dealing with an insolvent customer, the rules above may not help, and professional advice is important.

Grossly unfair terms

The Regulations let a supplier who considers that a term waiving or varying the payment date, or the implied interest term, is grossly unfair apply to the Circuit Court or to an arbitrator. The court or arbitrator may declare the term unenforceable, substitute another term, or order compensation, and the Regulations list factors to weigh. The Department's page says businesses can challenge grossly unfair terms and practices. The explanatory note to the Regulations says clauses excluding late payment interest or compensation are treated as grossly unfair, but the note is a summary, not operative text.

Making a claim in practice

The Department's FAQ "Do I issue an invoice for late payment interest and compensation?" says you should not issue an invoice for the interest and compensation. Instead, write to the purchaser saying payment is late and that you are now seeking late payment interest and compensation costs. It adds that interest accrues daily, and that if the customer does not respond you should contact them again, explaining that interest continues to accrue. The Department's page directs queries to promptpayment@enterprise.gov.ie.

Our suggestions for a credit-control routine, which are not legal requirements:

• Record the agreed payment terms on every contract and purchase order, including the date the invoice was received.
• Keep a log of reminders and replies, so you can show when the payment became overdue.
• Check the interest rate in force on the overdue date and keep your calculation with the file.
• Decide a policy on when to claim interest and compensation, so customers are treated consistently.
• If you are the payer, check that your own terms are not more than 60 days without clear agreement, and that public-sector terms stay within 30 days.

Our summary of directors' duties in Ireland sets out the wider obligations.

Learnsignal's offices are off Baggot Street in Dublin, and we offer in-person training from there. For current details, see our CPD pages.

Frequently asked questions

Do I have to send a reminder before claiming interest?

No. The Regulations make interest an implied term, claimable without a reminder if the purchaser does not pay by the relevant payment date, and the Department says businesses are entitled to it automatically.

What is the default payment period?

Where the contract is silent, the Regulations fall back to 30 calendar days after receipt of the invoice, or after delivery in certain cases. Payment periods over 60 days between businesses must be expressly agreed and not grossly unfair.

What is the current interest rate?

The Department's page shows 10.4% from 1 July 2026, which is the ECB rate plus 8 points. The rate resets every 1 January and 1 July, so check the page for the period when your payment became overdue.

Can I claim a fixed sum as well as interest?

Yes. The Regulations provide fixed compensation for recovery costs, which the Department's page lists as €40, €70 or €100 depending on invoice value, plus reasonable additional compensation.

Do the Regulations protect consumers who pay late?

No. The Regulations exclude transactions with consumers; they cover business-to-business and business-to-public-authority payments.

Late payment rights are strongest when your terms, dates and records are clear from the start, so tighten the paperwork before you need to rely on it.