CJEU on the EUR 40 Flat-Rate Fee for Late Payment
The Court of Justice of the European Union (CJEU) addressed, in Case C‑209/25, Directive 2011/7/EU on combating late payment in commercial transactions. The subject matter was the question of the conditions under which a creditor may claim the minimum fixed sum of EUR 40 for recovery costs in the event of late payment and whether such a claim may be denied in an individual case on grounds of abuse of rights.
The proceedings concern a dispute between two companies incorporated under Polish law. A supplier sought payment from its former contractual partner of a fixed sum of EUR 40 after an invoice from a sale of goods had not been settled until after the stated payment deadline had expired. The CJEU’s decision has been published on a provisional basis; the action in the main proceedings continues to be decided by the referring Rayongericht für die Hauptstadt Warschau (District Court for the Capital City of Warsaw).
Background to the Main Proceedings
Food Deliveries to Catering Businesses
In August 2020, the defendant company purchased food from the claimant company for its catering business. The invoice amounted to 4,874.60 zlotys, which was stated in the original proceedings as approximately EUR 1,218. According to supplementary information, the delivery concerned food for several catering establishments operated by the debtor.
The due date stated was 3 September 2020. Payment was made on 8 September 2020. According to the supplementary circumstances reported, the payment period had been extended by three days; the full payment was then made five days after expiry of that extended period.
Action Brought Only Several Years After Payment
The creditor brought an action on 23 May 2023 before the Rayongericht für die Hauptstadt Warschau. It sought an order requiring the debtor to pay the minimum fixed sum of EUR 40 under Art. 6(1) of Directive 2011/7/EU or under the corresponding Polish implementing provision. According to supplementary sources, the claim amounted to 175.88 zlotys as the then equivalent value of the fixed sum.
The creditor did not claim default interest. According to the findings of the referring court, there had been a stable business relationship between the parties for around four years. Deliveries were made several times a week; occasional short payment delays were, according to the supplementary information, raised by telephone, without any formal reminder and without any claim for default interest.
Change of Ownership and Further Proceedings
In October 2022, all shares in the creditor were transferred to a company established in Warsaw. The referring court stated that no payment arrears on the part of the debtor had been identified in the course of that share acquisition. At the same time, it noted that the acquiring company was financially unreliable.
The referring court further explained that it was only after the change of ownership that hundreds of similar applications for payment of the EUR 40 fixed sum were brought against former contractual partners, without default interest on the principal claims being sought. According to supplementary reports, the referring court considered that the acquisition of the shares was essentially connected with the aim of generating additional income from historical payment delays by former contractual partners. This assessment formed part of the evaluation by the court in the main proceedings; the final decision on the specific claim remains reserved to that court.
Legal Framework of Directive 2011/7/EU
Purpose of the Rules Against Late Payment
According to Art. 1(1), Directive 2011/7/EU serves to combat late payment in commercial transactions. It is intended to support the smooth functioning of the internal market and to foster the competitiveness of undertakings, in particular small and medium-sized enterprises.
Under Art. 1(2), the Directive applies to all payments made as remuneration for commercial transactions. According to Art. 2(1), commercial transactions mean transactions between undertakings or between undertakings and public authorities which lead to the delivery of goods or the provision of services for remuneration.
Concept of Late Payment
Art. 2(4) of Directive 2011/7/EU defines late payment as a payment not made within the contractual or statutory period of payment, provided that the conditions laid down in Art. 3(1) or Art. 4(1) are also satisfied. For commercial transactions between undertakings, Art. 3(1) provides in particular that the creditor must have fulfilled its contractual and statutory obligations and must not have received the amount due on time, unless the debtor is not responsible for the delay.
Invoices are of particular importance in this context because they generate requests for payment and may be decisive for determining the payment period. At the same time, the CJEU emphasised that the concept of late payment must be applied separately to each individual commercial transaction.
Minimum Fixed Sum Under Art. 6(1)
Art. 6(1) of Directive 2011/7/EU requires the Member States to ensure that the creditor is entitled, vis-à-vis the debtor, to payment of a fixed sum of at least EUR 40 where default interest is payable in commercial transactions under Art. 3 or Art. 4. Under Art. 6(2), that sum is payable without the need for a reminder and as compensation for recovery costs.
In addition, under Art. 6(3), the creditor may claim reasonable compensation for recovery costs exceeding the fixed sum. These may include, among other things, costs incurred as a result of instructing a lawyer or a debt collection agency.
The Question Referred by the Polish Court
The Rayongericht für die Hauptstadt Warschau had doubts as to whether Art. 6(1) of Directive 2011/7/EU precludes a review by a national court on grounds of abuse of rights. In essence, it wished to know whether a court may dismiss the application for the fixed sum where the circumstances indicate that asserting the claim is inequitable and contrary to the objectives of the Directive.
In doing so, the referring court referred to several special features of the facts:
- the previous stable business relationship between the parties,
- the isolated and minor payment delays tolerated in the past,
- the absence of claims for default interest,
- the bringing of numerous similar actions only after termination of the business relationship and after the change of ownership,
- the possible purpose of generating additional income from former contractual partners.
In addition, the referring court did not rule out the possibility that, due to the specific circumstances, there may already have been no late payment within the meaning of Art. 2(4) of the Directive, or that the creditor may have waived its rights under Art. 6(1). In that respect, the CJEU made clear that the examination of those factual and legal circumstances is a matter for the national court.
Decision of the CJEU
Minor Late Payment Does Not Preclude the Fixed Sum
The CJEU first confirmed its previous line of case-law on Directive 2011/7/EU. The minimum fixed sum of EUR 40 is owed to the creditor who has fulfilled its obligations for each payment not made when due as remuneration for a commercial transaction. This applies irrespective of the amount of the underlying claim and irrespective of the duration of the delay.
The insignificance of a late payment therefore, in itself, justifies neither exempting the debtor from the fixed sum nor reducing that amount. Otherwise, the practical effectiveness of Art. 6 of the Directive would be impaired, since that provision has both a compensatory and a deterrent function.
No Obligation to Claim Default Interest at the Same Time
The Court of Justice also clarified that a creditor may assert the fixed sum under Art. 6(1) of Directive 2011/7/EU independently of any application for default interest. The Directive does not require the creditor to claim default interest.
Nor does the Directive contain any specific time limit within which the claim to the fixed sum must be asserted. Questions relating to procedural rules and any possible extinguishment of such claims are, in principle, governed by the domestic legal order of the Member States. However, the principles of equivalence and effectiveness must be observed.
Abuse of EU Law Remains to Be Examined
At the same time, the CJEU held that Art. 6(1) of Directive 2011/7/EU does not prevent a court of a Member State from rejecting an application for payment of the fixed sum where, by its conduct, the creditor has infringed the general principle that no one may rely on provisions of EU law for fraudulent or abusive ends.
According to the decision, a finding of abuse requires two cumulative elements. First, there must be objective circumstances showing that, despite formal compliance with the conditions laid down by EU law, the objective pursued by the provision in question has not been achieved. Second, there must be a subjective element, namely the intention to obtain an advantage from the EU rules by artificially creating the conditions required for obtaining it.
Limits of the Abuse Review
Mere Exercise of the Claim Is Not Sufficient
The Court of Justice emphasised that merely relying on the right provided for in Art. 6(1) cannot already be regarded as the artificial creation of a situation giving rise to a claim. Recognition of the claim to the fixed sum generally contributes to the objectives of the Directive, because it is intended to make late payment unattractive and to secure the creditor the fullest possible compensation for its recovery costs.
Accordingly, several circumstances are not sufficient on their own to establish an abuse of rights. These include in particular:
- the short duration or minor significance of the late payment,
- further similar applications for payment of the fixed sum,
- the fact that the business relationship had ended several years earlier,
- the acquisition of the creditor by a financially unreliable company.
These factors may play a role in the overall assessment, but they do not replace the finding of the objective and subjective elements of abuse required by the CJEU.
Examination of the Specific Business Relationship by the National Court
The CJEU pointed out that the national court must examine whether, by its conduct, the creditor may have implicitly acknowledged that the debtor was not in late payment within the meaning of Art. 2(4) of the Directive when settling the invoice at issue. It is likewise for the national court to examine whether there was a waiver of rights under Art. 6(1).
Such a waiver may be compatible with the Directive if it was made freely. The tacit acceptance of occasional short delays in an ongoing business relationship may therefore be relevant in the main proceedings, without the CJEU itself having made the final assessment of the specific claim.
Significance for Contractual Payment Relationships
The decision makes clear that the EUR 40 minimum sum in commercial transactions between undertakings generally remains an independent and effective sanction for late payment. Neither a low invoice amount nor a short delay automatically precludes the claim under the interpretation of EU law.
At the same time, the CJEU places limits on a purely formal reliance on EU law. National courts may examine whether reliance on Art. 6(1) of Directive 2011/7/EU constitutes an abuse of rights in special circumstances. However, the thresholds for this are not low, because both objective circumstances showing failure to achieve the provision’s purpose and a subjective intention to artificially bring about the advantage must be established.
For contractual relationships in commercial dealings, the decision shows in particular the importance of clear payment arrangements, transparent stipulations on deadlines, and consistent handling in practice. In the main proceedings, it remains open how the Warsaw Rayongericht will finally assess the specific business relationship, the alleged extension of the payment period, the previous payment conduct, and the numerous actions brought later.
Frequently Asked Questions
CJEU C-209/25: When does the claim to the EUR 40 fixed sum under Art. 6(1) of Directive 2011/7/EU arise?
The claim generally arises where default interest is payable in commercial transactions under Art. 3 or Art. 4 of the Directive and the creditor has fulfilled its obligations. According to CJEU case-law, neither the amount of the claim nor the duration of the late payment is relevant in this respect.
May a court, following CJEU C-209/25, refuse the EUR 40 fixed sum on grounds of abuse of rights?
Yes, Art. 6(1) of Directive 2011/7/EU does not preclude refusal where the creditor relies on EU law fraudulently or abusively. For this, objective circumstances showing failure to achieve the provision’s purpose and a subjective element consisting in the artificial creation of the conditions for the claim must be established.
What practical consequences does CJEU C-209/25 have for companies in the event of late invoice payments?
Companies must note that even short payment delays can, in principle, trigger the EUR 40 fixed sum. At the same time, a particular manner of enforcing the claim may, in an individual case, be subject to an abuse review, which the competent national court decides on the basis of all circumstances.
Assessment by MTR Legal Rechtsanwälte
The CJEU’s decision on Directive 2011/7/EU concerns key issues in the performance of contracts in commercial transactions between undertakings: due dates, late payment, recovery costs, and the limits on exercising rights. Particularly in ongoing supply relationships and recurring payment deadlines, the legal assessment of agreements, actual practice, and subsequent enforcement of claims can be of considerable importance. For questions regarding payment provisions, contract drafting, and disputed claims, MTR Legal Rechtsanwälte provides legal advice in contract law.
