Belgium: Increases In The Legal Interest Rate And The Interest Rate For Late Payment In Commercial Transactions

The start of 2023 has also seen a rise in the interest rates that are most often applied in a judicial context.

The legal interest rate for late payment in commercial transactions

Under the Act of 2 August 2002 on combating late payment in commercial transactions¹, expiry of the statutory or stipulated payment period in commercial transactions triggers late-payment interest.

In the absence of a contractually-specified interest rate, the applicable percentage is determined by a reference interest rate², increased by 8% and rounded off to the higher half percentage point. For years (ever since 2016), the interest rate percentage had remained steady at 8%. However, for the first half of 2023, we are seeing an increase to 10.5%. (Communication from the FPS Finance in implementation of art. 5 of the Act of 2 August 2002 on combating late payment in commercial transactions, published in the Belgian Official Gazette on 17 March 2023.)

The moral is thus (as usual) to strictly comply with payment periods so as to avoid application of the increased interest rate. Always remember that the late-payment interest will begin to run as of the invoice's due date, without the creditor having to send any additional notice or demand for payment.

The legal interest rate in civil and commercial matters

The "ordinary" legal interest rate is going up as well. Legal interest is applied, for example, in civil cases and in commercial cases with consumers. This interest rate is set not per half-year, but only once a year.

In 2022, the legal interest rate was still a mere 1.5%, but for 2023 it has gone up to no less than 5.25%. (Communication from the FPS Finance in implementation of art. 2, §1 of the Act of 5 May 1865 on interest-bearing loans, published in the Belgian Official Gazette on 31 January 2023.)

Footnotes

1. For an extensive discussion of the Act on late payment in commercial transactions and the 2021 amendment to the Act, see the essay of Geert De Buyzer and Emilie Bogaerts in the ITAA-zine of December 2021: ITAA-zine - Institute for Tax Advisors and Accountants.

2. Specifically, the interest rate charged by the European Central Bank for basic refinancing operations.

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.