Late payment interest on government contracts never higher
Late payment interest on government contracts never higher
June 2023 – Public authorities that are late in paying their debts under a public contract (whether works, supplies or services) have to reckon with significant late payment interest. At 10.5%, the applicable interest rate has never been higher.
In recent years, the rate of interest on late payment interest for 'contracts concluded from 16 March 2013' remained stable at 8%. Even for the slightly older contracts, the 'contracts awarded between 8 August 2002 and 15 March 2013', this rate has remained at that level since 2009. But the skyrocketing inflation of the past few months undermines this stable situation: the rate was raised from 8 to 10.5% for all these contracts.
Also increase for 'oldest contracts'
This rising interest rate does not only apply to recent contracts. The rate also peaks for the so-called 'oldest contracts'. In January 2023, the interest rate was last adjusted, rising from 3.75% to 4.25%. Now another 0.50% will be added. That brings the new interest rate to 4.75%.
To refresh
Delay interest is automatically payable when a contracting authority fails to pay a public works, supplies or services contract on time. Delay interest to be paid is in addition to the amount due for performance. Which interest rate is applied depends on the date the contract was entered into. For this purpose, the federal government uses a table 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'. This table has now been updated.