The Late Payments in Commercial Transactions Law, Law 123(I) of 2012 (the Late Payments Law), repeals the 2003 law on late payments in commercial transactions and harmonises Cyprus law with European Directive 2011/07/EU. EU member states were obliged to transpose the directive into national law by 16 March 2013. The Late Payments Law regulates transactions between businesses and between businesses and public authorities, setting specific time-limits for payment for goods and services and providing for interest and penalties in the event of delay. Outstanding payments related to bankruptcy and insolvency proceedings and outstanding debts arising out of contractual agreements concluded before the new law came into force do not fall within its ambit.
Under the Late Payments Law both private and public entities are generally required to settle invoices no later than 30 days after receipt of the goods or services concerned or of the invoice, whichever is the later. The payment term can be contractually extended for up to a further 30 days. Any extension of the term for payments by a public authority must be expressly agreed and objectively justified in the light of the particular nature or features of the contract, and in any event cannot exceed 30 days. There is an exemption for public entities providing healthcare services, which may opt for a payment term of up to 60 days.
The Late Payments Law establishes a statutory entitlement to interest on overdue amounts at a margin of eight percentage points above the European Central Bank reference rate. The current rate is 8.75%. The creditor is also entitled to a fixed sum of €40 as compensation for collection costs.
Any contractual terms that are considered abusive will not be binding and may provide a basis for a claim for damages. Contractual terms that preclude interest for late payment or recovery of debt collection costs are automatically deemed to be abusive. Retention of title clauses are recognised by the Late Payments Law. Unions and organisations representing small and medium-sized businesses may have recourse to the courts on behalf of their members.
Unless there are special circumstances, courts and other public authorities are required to issue their decisions on matters arising under the Late Payments Law no later than 90 days after the action was commenced.
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