The principle: penalties due without a reminder
Article L441-10 of the French Code de commerce (commercial code) sets the rule between businesses: your payment terms state the rate of late-payment penalties, payable from the day after the payment date shown on the invoice, and the amount of the flat recovery fee. Above all, penalties are payable without any reminder being necessary.
In other words, you do not need to send a reminder or a formal notice for them to start running. They are due from the day after the payment date on the invoice, for each day of delay.
The rate and the fee must appear on every invoice between businesses (article L441-9 of the Code de commerce). A breach of that article's invoicing rules can lead to an administrative fine of up to €75,000 for an individual and €375,000 for a company.
Which rate applies?
There are two situations:
- You set a rate in your terms and conditions or contract: that rate applies, but it cannot be lower than three times the legal interest rate (taux de l'intérêt légal, set by the French state every six months).
- You set nothing: the rate is the European Central Bank rate for its most recent main refinancing operation, plus 10 points. For the first half of the year, the rate in force on 1 January is used; for the second half, the rate in force on 1 July.
| Period | ECB rate used | Default rate (ECB + 10 points) | Legal interest rate (business creditor) | Minimum agreed rate (3 × legal rate) |
|---|---|---|---|---|
| H1 2026 | 2.15% | 12.15% | 2.62% | 7.86% |
| H2 2026 | 2.40% | 12.40% | 2.75% | 8.25% |
For the first half of 2027, the default rate will depend on the ECB rate in force on 1 January 2027. According to the Banque de France, it has been 2.65% since 16 September 2026: if it does not change by then, the default rate will be 12.65%. The legal interest rate for the first half of 2027 has not yet been published.
"ECB + 10 points" is the rate the law applies when nothing is agreed. It is also the simplest to write on your invoices, because it follows rate changes automatically.
The calculation, day by day
Penalties are calculated like interest, pro rata to the number of days late:
Penalties = amount due × annual rate × days late ÷ 365
Days are counted from the day after the due date until the day of payment. Under the Code de commerce, payment is made on the date the funds are made available to the creditor, not the date the transfer was sent.
Example 1: default rate
Invoice of €4,200 including VAT, due 15 September 2026, paid 15 October 2026: 30 days late. No rate in the contract, so 12.40% applies.
- 4,200 × 12.40% = €520.80 of penalties for a full year of delay;
- 520.80 × 30 ÷ 365 = €42.81 of penalties;
- plus the €40 flat fee;
- total claimable on top of the principal: €82.81.
As long as the invoice is unpaid, the meter keeps running: here, about €1.43 per extra day.
Example 2: minimum agreed rate
Same invoice, but your terms set the legal minimum, 8.25%: 4,200 × 8.25% × 30 ÷ 365 = €28.48, plus the €40 fee.
Delay spanning two half-years
The default rate changes on 1 January and 1 July. Calculating each period with the rate of the matching half-year is the method closest to the text.
The flat €40 recovery fee
Any business that pays late owes its creditor, automatically, a flat fee for recovery costs, set at €40 by article D441-5 of the Code de commerce.
- It is due once per invoice paid late, not per day of delay or per reminder.
- It is due even if the invoice is eventually paid: it is enough that it was paid after the agreed date.
- If your actual recovery costs are higher, you can ask for additional compensation, with supporting evidence.
- It cannot be claimed when the opening of safeguard, receivership or liquidation proceedings prevents the customer from paying on the due date.
Example: a customer pays three invoices 10 days late each. They owe 3 × €40 = €120 in fees, plus penalties calculated invoice by invoice.
What about a consumer?
The article L441-10 penalties and the €40 fee apply only between businesses: the text targets any professional who pays late. You cannot claim them from a consumer.
With a consumer, late payment of a sum of money gives a right to interest at the legal rate, from the formal notice (article 1231-6 of the French Civil Code). When the creditor is a business, that rate is 2.75% a year in the second half of 2026. On €4,200 over 30 days, that is about €9.49.
Claiming penalties in practice
Late-payment penalties are not subject to VAT. The BOFiP (official French tax doctrine) states that late-payment interest claimed under article L441-10 is not linked to a transaction within the scope of VAT. Claim it as a gross amount, without adding VAT.
In practice, attach a dated statement to your firm reminder or formal notice: invoice number, amount due, due date, number of days, rate, penalties, fee. You are not obliged to demand them: you can announce them, then waive them if the customer pays promptly. For the next steps, see what to do when a customer does not pay.
On your invoices, a clause like this is enough: "In case of late payment, penalties are payable from the day after the due date, without reminder, at the ECB refinancing rate plus 10 points, together with a flat recovery fee of €40 (articles L441-10 and D441-5 of the French Code de commerce)." The other required details are in our article on mandatory invoice details in France.
Frequently asked questions
Do I need to send a reminder for late-payment penalties to run?
No. Between businesses, article L441-10 of the Code de commerce makes penalties payable without any reminder, from the day after the payment date on the invoice.
What is the late-payment penalty rate in the second half of 2026?
If no rate is agreed: 12.40% a year (ECB refinancing rate on 1 July 2026, 2.40%, plus 10 points). An agreed rate must be at least 8.25%, three times the legal interest rate of 2.75%.
Is the €40 fee due for each reminder?
No. It is due once per invoice paid late, whatever the number of reminders or days of delay. Three late invoices give a right to €120.
My invoice states no rate: can I still claim penalties?
The law provides a default rate (ECB + 10 points) when nothing was agreed. But leaving these details off the invoice is itself a breach that can lead to an administrative fine: fix your invoice templates.
Do I charge VAT on late-payment penalties?
No. According to the BOFiP, late-payment interest claimed under article L441-10 of the Code de commerce is not subject to VAT.
Sources
- Légifrance — Article L441-10 of the Code de commerce (legifrance.gouv.fr)
- Légifrance — Article L441-9 of the Code de commerce (invoice details, fine) (legifrance.gouv.fr)
- Légifrance — Article D441-5 of the Code de commerce (flat €40 fee) (legifrance.gouv.fr)
- Banque de France — ECB key interest rates ("Taux directeurs") (banque-france.fr)
- Service-Public.fr — Legal interest rates for the second half of 2026 (30/06/2026) (service-public.gouv.fr)
- Entreprendre.Service-Public.fr — B2B payment terms and late-payment penalties (checked 07/08/2026) (entreprendre.service-public.gouv.fr)
- Légifrance — French Civil Code, articles 1231 to 1231-7 (legal-rate interest) (legifrance.gouv.fr)
- BOFiP — BOI-TVA-BASE-10-10-10 (late-payment interest outside the scope of VAT, § 100 to 120) (bofip.impots.gouv.fr)
- Entreprendre.Service-Public.fr — Mandatory invoice details (entreprendre.service-public.gouv.fr)
This article summarises the official texts to help you get organised. It is not a substitute for personalised advice from your accountant.