Today, the European Commission decided to refer Greece to the Court of Justice of the European Union for not correctly applying the rules under the Late Payment Directive (Directive 2011/7/EU).
Late payments have negative effects on businesses, by reducing liquidity, preventing growth, hampering resilience and potentially impeding efforts to become greener and more digital. Under the current economic context, businesses and in particular SMEs, rely on regular payments to operate and invest. The Late Payment Directive obliges public authorities to pay their invoices within 30 days (or 60 days for public health authorities). By following these payment deadlines, public authorities set a good example in the fight against bad payment culture.
The Commission is referring Greece the Court of Justice due to payment practices by Greek public hospitals towards their suppliers that are in breach of the Late Payments Directive. These hospitals are not respecting the obligation to provide immediate payment of their debts when suppliers agree to waive their rights to interest, contrary to established case-law. The Commission already referred Greece to the Court of Justice in November 2023 in another Late Payment case, targeting the excessive payment delays by public hospitals in Greece (INFR(2019)2298). Late payments by public hospitals hamper the competitiveness and resilience of businesses working in the health sector, especially SMEs. During the COVID-19 pandemic, these businesses played a crucial role in quickly supplying hospitals, helping them remain operational.
Background
Late payment causes administrative and financial burdens, which are particularly acute when businesses and customers are in different EU countries. Cross-border trade is inevitably impacted. To address this, Directive 2011/7/EU on combating late payment in commercial transactions put in place strict measures which, when properly implemented by EU countries, contribute significantly to employment, growth and an improvement in the liquidity of businesses.
Member States have a special responsibility in ensuring that public authorities pay on time the goods and services that they procure. The Commission supports Member States in enforcing more effectively the Directive's provisions, including making available stronger monitoring and enforcement tools. The Commission is currently setting up a European Observatory of payments in commercial transactions as announced in the Update to the Industrial Strategy adopted in May 2021. In addition, the Commission also presented in September 2023 a revision of the Late Payment Directive, with a proposal for a Regulation on combatting late payments in commercial transactions. This revision is part of a series of initiatives to address the needs of SMEs, as announced by the President of the Commission in the State of the Union 2022. The revision aims to address the regulatory shortcomings and gaps, foster more timely payments and bring better balance between large and small operators.
