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EU Late Payment Directive Introduced
Cyprus has incorporated into its Legislation the directive on delayed payments. This legislation is in effect from 27 July 2012. Taxand Cyprus outlines the new regulations the Legislation will put in place.
The Legislation states that for transactions between companies, the creditor is entitled to an interest payment on the condition that all contractual and legal obligations have been fulfilled by the creditor. This also applies if the creditor has not been paid on time, unless the debtor is not responsible for the delay. The legislation is valid for the transactions between companies as well as the Public Authorities.
The payment deadline between transactions of companies and the Public Authorities should not exceed in any case 30 calendar days from the date that the debtor received the invoice. It is possible though to extend to a maximum of 60 calendar days where the debtor is the public authority with activities of financial, industrial or commercial nature or hygiene services.
In the case when the agreement does not state the date or payment deadline then the creditor is entitled to impose an interest payment after 30 days from the date of receipt of invoice or goods or services by the debtor. In this case, according to the legislation, the creditor has also the right to charge the debtor the fixed amount of 40 Euro and claim from the debtor as compensation the expenses incurred for the collection of delayed payment.
The new legislation has been welcomed by all parties especially in the time of crisis where delayed payments can have a crucial effect on small and medium sized businesses that are more vulnerable financially. Although this may not be as important for larger corporations and multinationals, they will benefit from the increased efficiency of the process.
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