Delayed Payments in Commercial Transactions Law – Cyprus

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The Latest European Directive on Delayed Payments in Commercial Transactions has been Incorporated in the Legislation of Cyprus

The legislation regarding delayed payments in commercial transactions has been modified, thus harmonizing Cyprus law with the latest European Directive (2011/07/EE) of 2011 on the matter. EU member states were obliged to harmonize their legislation by 16 March 2013. The legislation (No.123(1)2012) covers transactions between businesses, as well as between businesses and public authorities.

The new legislation sets specific time-limits for the payment of goods delivered and services provided, specifies a minimum amount of damages once a payment has been delayed, and describes how a late payment interest rate will be determined in such cases.

More specifically, public authorities are obliged to pay businesses within 30 days, or 60 days in exceptional cases. A maximum period of 60 days is set in the legislation for payments between businesses. Businesses will also be entitled to a minimum amount of 40 Euros for debt collection purposes once the payment deadline has passed, but will have the right to claim additional payment for the expenses they make towards debt collection purposes. Late payment interest will be at least 8% higher than the interest rate set by the European Central Bank. The legislation also provides that, under normal circumstances, courts and other public authorities will issue their decisions on these matters within a maximum of 90 days as from the day the action or the petition was filed.

The payment period of 30 or 60 days begins from the date on which the invoice has been received; if that date is uncertain, the period begins from the date on which the goods or services have been received; if the invoice has been received before the date on which the goods were delivered or the services provided, the payment period begins at that later date. If the party that receives the goods or services has procedures of acceptance and verification of the delivery of goods and/or of the provision of services and their correspondence to the terms of the agreement, and if the invoice has been received before these procedures have taken place, the payment period begins on the date on which these procedures take place.

The payment period can be extended up to 60 days for public authorities in the cases of organizations that engage in business activity of industrial or commercial nature and offer goods and services in the market, in the cases of public organizations that are authorized to offer sanitation services as well as in cases where such an extension has been specifically agreed upon and is justified by the particular nature or characteristics of the agreement.

Any agreement terms that are found to be abusive are deemed non-obligatory and may provide justification for making damage claims. Agreement terms that preclude late payment interest charges or debt collection charges are deemed as grossly abusive.

In cases where an agreement explicitly provides that a seller maintains the ownership of goods until they have been fully paid for, the new legislation upholds the seller’s ownership.

Unions and organizations that have the right to represent small and medium-sized businesses may have recourse to the courts or other competent authorities in regards with agreement terms that they consider abusive.