Late payment interest on government contracts continues to rise
Late payment interest on government contracts continues to rise
October 2023 - Since 1 October 2023, the interest rate for late payment interest on public contracts (both works, supplies and services) for the so-called 'oldest' contracts is 6.25%. The default interest rate for younger contracts has also increased.
The interest rate for public contracts awarded before 8 August 2002 and announced from 1 January 1981 was raised from 5.25% to 5.50% on 1 June. In August the interest rate rose further to 5.75% and in September it reached 6%. To clarify, in July last year the interest rate at 1.75% was less than a third of what it is today.
The default interest rate for public contracts concluded from 16 March 2013 also increased. Today, it stands at 12% compared to 10.5% in June.
When does the government owe default interest?
Default interest is payable by the government when a public contract is not paid on time. The amount is in addition to the amount due for performance.
The interest rate to be applied depends on the date on which the contract was entered into. The federal government uses a table for this purpose that distinguishes between 'Contracts concluded from 16 March 2013 onwards', 'Contracts awarded between 8 August 2002 and 15 March 2013' and 'Contracts awarded before 8 August 2002'.