Payment Terms Legislation In France
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Article L441-10 of the French Commercial Code enacts the EU Late Payment Directive, with the Hamon Law and Sapin II Law updating this code over recent years. (see European Union for details). In addition, French law has stricter maximum terms and penalties administered through an ‘Ombudsman for Undertakings’. Payment terms cannot exceed 60 days from the day the invoice is issued by the supplier. However, where both parties agree, the terms are not grossly unfair, and are expressly stated, a term of 45 days from the end of month following the invoice issue date is possible. For periodic invoices the maximum is 45 days from the date of issue. Various maximum terms for specific products including sporting goods, toys, agricultural machinery, leather, watches and jewellery are also set out in article L441-11.
Ordinance 2021-859 of June 30, 2021 enacted the EU UTP in the supply chain directive into the French Commercial Code. Among other amendments, article L441-11 of the commercial code sets the maximum payment terms of 30 days after delivery for perishable goods and 60 days for other agricultural products for companies of all sizes who trade in these goods. For periodic invoices related to seasonal products the maximum term is 30 days after the end of the month.
Article L441-12 sets a maximum payment term for export orders from France to destinations outside the EU at 90 days after issue of invoice. This does not apply to sales to companies defined as “large” within Decree No. 2008-1354 of December 18, 2008.
Decree 2015-1553 of 27 November 2015 requires all audited companies to report the proportion of supplier invoices paid late. This can either be the proportion of late invoices on the date of the financial year end or a cumulative total broken down by time period.
The Charter for Responsible Supplier Relations in France, created by the Ombudsman for Undertakings, promotes fair payment across 10 commitments.
The Charter of Good Practices in the Fashion and Luxury Goods Industry promotes standard terms of 30 days.
See European Union for the Directive on Unfair Trading Practices in the Food Supply Chain which was adopted on 30 April 2019.
The penalty interest rate for late payment is the European Central Bank refinancing rate plus 10%. A different rate can be agreed in contract but cannot be less than three times the legal interest rate.
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