In order to protect European businesses, in particular SMEs, against late payment and to improve their competitiveness, a new Directive 2011/7/EU on combating late payment in commercial transactions was adopted on 16 February 2011 and must be integrated into national law by Member States by 16 March 2013 at the latest.
Cyprus is one of first European Union countries that has adopted legislation implementing provisions aimed to combat late payments in commercial transactions.
According to the new legislation, the deadline for both public and private entities to pay bills for goods or services in business to business transactions will now be 30 days, unless the payment deadline is contractually extended for up to a further period of 30 days.
For public-to-business payments the deadline is 30 days, any extension has to be expressly agreed and objectively justified in the light of the particular nature or features of the contract, however the deadline should not exceed 60 days. Public entities providing healthcare services are exempted from this rule and they can opt for a deadline up to 60 days.
Further, a statutory interest rate on overdue payments is set at the reference rate plus at least 8%. Currently, the rate is overall 8.75%. The creditor is also entitled to a fixed sum of €40, being compensation for collection costs.