Poland amends legislation on payment terms in commercial transactions

Oct 07, 2019 | Insight

Poland has recently amended its legislation with respect to repayment obligations in commercial transactions.  Coming into force on 1 January 2020, the amendment is designed to limit payment backlogs, shortening of the admissible time for payments that take place as a part of commercial transactions.

Henceforth, a payment term in a transaction in which a debtor is a public entity (not a healthcare entity) cannot exceed 30 days from the invoice issuance date.  When a debtor is a large company and a creditor is a micro-enterprise or a medium-sized company, the deadline for payment cannot exceed 60 days from the day of the delivery of the invoice or receipt confirming the delivery of goods or performance of services. Any provisions of a contract specifying longer payment periods will be invalid.

HIGHER INTEREST RATES PERMISSIBLE

The amendments also provide for a higher interest rate for late payments and higher compensation for creditors related to the costs of recovering receivables.

A creditor will be entitled to minimum statutory interest for late payment equal to the reference rate of the National Bank of Poland plus 10 p.p. (approx. 11.5%).  The thinking is to design a system to discourage companies from financing their business activities at the expenses of their business partners.

REPORTING

There will also be a new reporting obligation for members of a management board (and general partners and liquidators in such cases) of large companies where income exceeded the equivalent of EUR 50 million in a tax year.  This transparency component is designed to show potential business partners the true nature of potential trade debtors.