If a German business owes you money and pays late, German law does not treat interest as a favor you ask for. It is a statutory right. Under the German Civil Code (BGB), commercial debtors owe late payment interest of nine percentage points above the base rate, plus a flat 40 euro recovery fee. These rules implement the EU Late Payment Directive 2011/7/EU, so the same logic (a reference rate plus a fixed margin plus a fixed fee) appears across the EU. The problem is rarely the law. It is that finance teams write the interest off because calculating and chasing it by hand does not survive contact with a busy AR ledger. That is exactly what an automated dunning process recovers.
Key Takeaways
- In Germany, default (Verzug) begins under Paragraph 286 BGB: by a reminder after the due date, or, for businesses, automatically 30 days after the due date and receipt of the invoice.
- The interest rate under Paragraph 288 BGB is nine percentage points above the base rate for business-to-business claims, and five percentage points where a consumer is involved.
- The base rate (Basiszinssatz) is set by the Deutsche Bundesbank twice a year. It currently stands at 1.52 percent (effective 1 July 2026, source: Deutsche Bundesbank).
- Against businesses, a flat 40 euro late payment fee applies on top of interest (Paragraph 288(5) BGB).
- German law transposes the EU Late Payment Directive 2011/7/EU and exceeds its minimum, which sets a floor of eight percentage points above the ECB reference rate.
In This Article
- When Does Late Payment Begin? (Paragraph 286 BGB)
- How Much Is the Interest? (Paragraph 288 BGB)
- The Base Rate: The Moving Part of the Calculation
- A Worked Calculation
- The 40 Euro Flat Fee (Paragraph 288(5) BGB)
- The EU Late Payment Directive 2011/7/EU
- How to Claim Late Payment Interest
- Why Automated Collections Capture Interest Manual Teams Write Off
- Frequently Asked Questions
When Does Late Payment Begin? (Paragraph 286 BGB)
Interest only accrues once the debtor is legally in default, and default does not start on the invoice date. Paragraph 286 BGB provides two routes into default.
The first is a reminder. Once the claim is due and you send the customer a payment reminder (Mahnung), the debtor enters default on receipt of it (Paragraph 286(1) BGB). If a calendar due date was agreed, the debtor enters default without any reminder (Paragraph 286(2) BGB).
The second is the 30-day rule. Under Paragraph 286(3) BGB, a debtor is in default at the latest 30 days after the due date and receipt of the invoice, with no reminder required. Against a consumer, this applies only if the invoice expressly pointed out that consequence. Against a business, it applies without that notice.
In practice, a German business customer is in default from day 31 after receiving the invoice at the latest, whether or not you sent a reminder. A reminder can trigger default earlier, never later.
How Much Is the Interest? (Paragraph 288 BGB)
Paragraph 288 BGB sets the rate, and it depends on who is involved:
- Between businesses (B2B, payment claims): nine percentage points above the base rate (Paragraph 288(2) BGB). A payment claim (Entgeltforderung) is the right to be paid for goods or services delivered, which is the normal case for any sales invoice.
- Where a consumer is involved (B2C): five percentage points above the base rate (Paragraph 288(1) BGB).
The rate is therefore not a fixed percentage but a fixed margin on top of a moving base, the base rate. That is why the effective interest rate changes twice a year.
The Base Rate: The Moving Part of the Calculation
The base rate (Basiszinssatz) under Paragraph 247 BGB is announced by the Deutsche Bundesbank on 1 January and 1 July each year. It tracks the interest rate of the most recent main refinancing operation of the European Central Bank. Never invent this figure. Look it up before every calculation.
Current value: effective 1 July 2026, the Deutsche Bundesbank raised the base rate to 1.52 percent (from 1.27 percent). That produces, as of 1 July 2026:
- B2B (payment claim): 1.52 percent plus 9 percentage points equals 10.52 percent per year.
- B2C: 1.52 percent plus 5 percentage points equals 6.52 percent per year.
Check the base rate for the relevant default period. If the default spans more than one half-year, apply the rate in force for each period.
A Worked Calculation
The formula for late payment interest is:
Interest = claim amount × interest rate × days in default / (100 × 365)
We use actual days in default divided by 365. Take a B2B claim:
- Outstanding invoice amount: 10,000 euro
- B2B interest rate: 10.52 percent per year (example rate based on the base rate effective 1 July 2026)
- Days in default: 60
Interest = 10,000 × 10.52 × 60 / (100 × 365) = 172.93 euro. Add the 40 euro flat fee, and the total late payment claim is 212.93 euro.
On one invoice that looks minor. Across hundreds of open items a month sitting weeks past terms, the uncollected interest adds up to a five- or six-figure annual figure that quietly gets written off.
The 40 Euro Flat Fee (Paragraph 288(5) BGB)
When a debtor who is not a consumer defaults on a payment claim, you are also entitled to a flat 40 euro fee (Paragraph 288(5) BGB). It is owed regardless of fault and arises with the default itself, whether or not you incurred an actual loss.
Two points matter: the flat fee is credited against any late payment loss you claim to the extent that loss consists of recovery costs, such as reminder costs. And it cannot be charged to consumers. In pure B2B trade, it is a reliable additional claim on every late payment.
The EU Late Payment Directive 2011/7/EU
Germany's rules are not a national quirk. They transpose EU Directive 2011/7/EU on combating late payment in commercial transactions. The Directive requires interest of at least eight percentage points above the ECB reference rate, plus a minimum flat compensation of 40 euro for recovery costs.
Germany exceeds that floor with its nine percentage points for B2B payment claims. For a global creditor, the practical takeaway is that against a German debtor, German law and its higher rate apply, while other member states apply their own transposition rate. The 40 euro minimum is common across the EU. If you invoice German counterparties, pricing this right into your order-to-cash process is straightforward and enforceable.
How to Claim Late Payment Interest
The claim exists by law, but it only pays off if you quantify it and ask for it. In practice this sequence works:
- Document the start of default cleanly: due date, invoice receipt, and the reminder date if there was one.
- Look up the base rate for the default period and apply the correct margin.
- Calculate interest to the day and add the 40 euro flat fee.
- State the interest and fee openly on the next reminder instead of silently dropping them.
This is exactly where manual processes break: the calculation is fiddly per item, the base rate moves, and under time pressure teams chase the principal and leave the interest behind. The claim does not lapse immediately, but in effect it never gets raised.
Why Automated Collections Capture Interest Manual Teams Write Off
Late payment interest is a calculation problem, and software solves calculation problems better than a team under deadline pressure. An automated dunning process derives the default date from due date and invoice receipt, computes interest to the day using the base rate in force, and states interest and the flat fee automatically on every reminder. No item slips through.
The second lever is payment reconciliation. If a payment is matched days after the cash actually lands, the default clock keeps running even though the customer has paid, and your DSO inflates artificially. Immediate, automatic matching closes paid invoices at once and stops interest accruing at the right moment. Disciplined collections capture the interest you are owed without straining a single customer relationship you want to keep.
Frequently Asked Questions
When can I start charging late payment interest in Germany?
From the moment default begins. That is receipt of a reminder after the due date or, for businesses, at the latest 30 days after the due date and receipt of the invoice (Paragraph 286 BGB). Interest runs from that day, not from the invoice date.
What is the German late payment interest rate in 2026?
Nine percentage points above the base rate for business-to-business payment claims, and five percentage points where a consumer is involved. With a base rate of 1.52 percent (effective 1 July 2026, Deutsche Bundesbank), that is 10.52 percent for B2B and 6.52 percent for B2C. Verify the base rate for your period.
What is the 40 euro late payment fee?
Under Paragraph 288(5) BGB, when a business defaults on a payment claim you are entitled to a flat 40 euro fee on top of interest. It does not apply to consumers.
Does the EU Late Payment Directive apply to German claims?
Yes. Paragraphs 286 to 288 BGB transpose Directive 2011/7/EU. Germany exceeds the Directive's minimum of eight percentage points above the ECB reference rate by applying nine percentage points to B2B claims. The 40 euro minimum recovery fee is common across the EU.
How do I calculate late payment interest?
Use claim amount times interest rate times days in default, divided by (100 times 365). For 10,000 euro at 10.52 percent over 60 days that is 172.93 euro, plus the 40 euro flat fee.
Do the same rules apply to consumers?
No. For consumers the rate is five, not nine, percentage points above the base rate, the 40 euro fee does not apply, and the 30-day rule only applies if the invoice expressly pointed out that consequence.
The Bottom Line: A Right That Only Pays When Automated
Late payment interest and the 40 euro fee are real money that German law grants you. The reason finance teams forgo it is rarely a legal one. It is capacity: calculating to the day across changing base rates and hundreds of items is hard to do by hand.
If you want to see how automated collections calculate and claim late payment interest against your own open items with German counterparties, talk to the Transformance team. Book a Call.
