Interest for Delay

If a payment is delayed, the party under the payment obligation has to pay interest for late payment in accordance with the Interest Act. The interest for delay has to be paid even if there is no agreement on it, unless in certain exceptional cases.

According to the Interest Act the delayed party has to pay an annual interest on the delayed payment. The interest is seven or eight percentage points higher than the reference rate of interest applied by the European Central Bank, which is defined in Article 12 of the Interest Act.

If the parties have determinated a due date in advance, interest has to be paid from the due date onwards. If the parties have not predetermined a due date, interest accrues starting from 30 days after the creditor sends an invoice to the debtor or requests payment. However, the debtor is not obligated to pay the interest of delay for the period before they received the invoice or request.

The parties may agree on the amount of interest and the payment of it with an agreement. However, if the debtor’s obligation is related to a contract concerning consumer credit or consumer goods or services between a businessman and a consumer, or a contract according to which the debtor purchases or rents accommodation, the obligation to pay interest for delay is not valid in so far as the debtor would be liable to pay higher interest for the delay than what is set out in the Interest Act.

Interest for delay may be adjusted on certain conditions if the debtor is a natural person and the debt is not related to the pursuit of a business. Interest for delay may be adjusted e.g. if the delay is due to financial difficulties which the debtor has suffered because of illness, unemployment or other specific reason which is primarily not attributable to the debtor themself.