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Effective July1,2025, Malta lowered the statutory interest rate applicable to late payments in commercial transactions to 10.15 % per annum. This adjustment reflects the European Central Bank`s decision to lower its reference rate, as regulated under EU Directive 2011/7/EU.
Any commercial invoice becoming overdue on or after 1st July 2025 will now accrue interest at a rate of 10.15%, representing a reduction of 1% from the previous rate of 11.15%, which had been in effect since 1st January 2025. This interest rate applies automatically to overdue payments in commercial transactions unless the parties have agreed otherwise; however, contractual terms cannot fall below the minimum rights established by the Late Payment Directive.
Interest is calculated on a daily basis from the due date, without the need for formal notice.
- Existing Contracts: Payments that became overdue before 1st July 2025 remain subject to the previous interest rate of 11.15%.
- New Contracts or Overdue Payments on or after 1st July 2025: The reduced 10.15% rate applies.
This adjustment reflects a recalculation under EU Directive 2011/7/EU, which sets the interest rate as a fixed 8% margin (unchanged) plus the European Central Bank (ECB) reference rate, now reduced to 2.15%.
Interest begins to apply the day after the agreed payment deadline has passed. If no payment terms are specified in the contract, suppliers are entitled to start charging interest 30 calendar days after either the receipt of goods or services, or the date of the invoice. Interest continues to accrue on a daily basis.
A fixed minimum compensation of €40 per invoice remains automatically due to cover recovery costs, and this applies separately from the accrued interest.
This reduction in the statutory interest rate may slightly reduce the financial deterrent for late payment, potentially making it less punitive for debtors. As a result, it may marginally extend the period debtors are willing to delay payments.
Originally published 08/07/2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
