The increased statutory interest rate is applied if an amount due in connection with a court conviction is not paid within two months of the date on which the decision became enforceable. In this case, the legal interest rate is increased by five points (Article L.313-3 of the French Monetary and Financial Code). Calculated on the basis of the amount of government funding over 13 weeks, the legal interest rate has fallen significantly in recent years, from 0.71% in 2012 to a historic level of 0.04% in 2013 and 2014. As a result, it no longer fulfilled its mission of persuading the debtor to pay on time. New calculations and new categories of the legal interest rate introduced. These payment terms begin on the day the invoice is issued by the Seller/Service Provider and not on the day of receipt of the invoice by the Buyer/Customer. This was recalled by the Commission for the Examination of Commercial Practices (CEPC), which stated that « given the legal provisions applicable to payment terms, it is illegal to consider the date of receipt of an invoice as the beginning of the payment period » (CEPC, 2 March 2017, Opinion No. 17-5; see also CEPC, 14 March 2019, Opinion No. 19-5). The statutory interest rate is the reference interest rate used to calculate penalties for late performance of an obligation. The formula for calculating the statutory interest rate has therefore been modified to be more representative of a creditor`s refinancing costs and to be based on changes in economic activity.
Alexandre Bailly is a partner in Morgan Lewis` litigation practice. Alexandre Bailly represents multinational and French clients in international commercial litigation with a particular focus on complex commercial issues. Working closely with other members of the morgan Lewis team, he has negotiated and managed matters relating to industrial risk, commercial contracts, banking, bankruptcy, construction and portfolio management. His clients include companies in the automotive, aerospace, construction, communications, technology and consumer goods sectors. This reform of the legal interest rate, which came into effect on January 1, 2015, has resulted in two major innovations: Display interest rates, exchange rates and gold prices Warning: Some browsers refuse to redirect to the Webstat site to download files and block them for security reasons. To work around this problem, you can copy the link by right-clicking on it and pasting it into your browser`s address bar. This will complete the download. In particular, between traders in the sales and services sector, this default interest is subject to a special regime in accordance with Article L.441-6 of the French Commercial Code. According to this article, the conditions of sale that must be exchanged between the parties define the late payment interest rate associated with the non-payment of an invoice. Unless otherwise stated, unless the interest rate applied, unless the interest rate can be set at less than three times the legal interest rate, corresponds to the refinancing rate of the European Central Bank, increased by 10 points (currently 10.05%). This default interest is automatically due from the first day following the date of payment indicated on the invoice, without the need to formally notify it.
Please note that the date of payment, as well as the amount of the penalties and the amount of the compensation for recovery costs in the event of late payment, must be indicated on the invoice (Article L.441-9, I of the French Commercial Code). Note that the legal interest rate should not be confused with other related concepts, in particular the increase in the legal interest rate and default interest: the creation of two different interest rates – a higher rate, intended mainly for the protection of individuals, and a second, intended for professionals. The long-term interest rate in France is the return on investing in a French government bond with a maturity or close to 10 years. The interest rate is set by the ECB to provide a comparable long-term interest rate for each European country. Long-term bond yields are closely monitored by central banks, as falling yields can signal a lack of confidence in the economy. For the first half of 2015, the decree of 23 December 2014 sets the legal interest rate for the protection of natural persons at 4.06% and in the other case at 0.93%. Non-payment within the standard or agreed payment period may result in the payment of the following persons: The French Minister of the Economy has expressly asked the DGCCRF to monitor the compliance by companies with the French payment terms. Consequently, the parties must continue to comply with the usual or agreed payment terms and, in particular, even if they agree, cannot extend these conditions beyond the limits provided by French law.