New law against unreasonably long terms of payment
26 April of this year saw the publication in the Netherlands Bulletin of Acts, Orders and Decrees of a new law aimed against unreasonably long terms of payment being wielded, by introducing a maximum term of payment of 60 days to be observed by large enterprises in their (payment) dealings with sole traderships and small to medium-sized enterprises and by voiding the inclusion in agreements between large enterprises of the one part and sole traderships or SMEs of the other of terms of payment that go beyond the 60-day maximum. A one-year transitional period (from the new legislation’s effective date onwards) has been provided for where it concerns existing agreements.
Book 2 of the Netherlands Civil Code classifies enterprises in terms of size. The definition of a “large enterprise” calls for (at least) two of the following three criteria being met:
- the asset value as per the balance sheet should exceed 20 million euros;
- net sales for the financial year should exceed 40 million euros;
- the total workforce for the financial year should average out at 250 or over.
Tardy payment is to be penalised by charging the offending party with interest on the outstanding amount calculated at the statutory rate for the period from the day after the deadline for payment up to and including the actual date of payment.
The new legislation is to take effect on the first of July 2017.