How much more you are owed by someone who pays you late

You do not have to ask for the interest: it accrues on its own

It is the first thing that surprises people, and it is in article 5 of Ley 3/2004: the debtor falls into arrears automatically, «por el mero incumplimiento del pago en el plazo pactado o legalmente establecido» — by the mere failure to pay within the agreed or statutory period — with no need for a reminder, a recorded letter or a notice that payment is due. It is not that you may start charging interest when you demand payment: it is that interest has been accruing since the day after the due date, whether you demand it or not.

Article 6 sets the two conditions, and they are reasonable: that you have done your part — delivered, performed the service — and that you have not been paid on time for a reason that is not your fault.

From when it counts: the default period is 30 days

If the contract says nothing, article 4 sets the payment period at thirty calendar days from when they received the goods or from when you performed the service. A longer one can be agreed, but there is a ceiling: sixty calendar days, and that cap cannot be got round even with the creditor's signature. A «pago a 90 días» — payment at 90 days — written into a contract is worth no more than the paper.

The statutory rate changes every six months, and that is why this is worked out in stretches

This is where almost every calculator goes wrong. The statutory rate in article 7 is the European Central Bank's rate on its most recent main refinancing operation before the half-year, plus eight percentage points, and the Ministry publishes it in the BOE every six months. In other words: there is a different rate for each half-year.

An invoice that falls due in May and is paid in September is not settled at one rate: it is split into two stretches, each with its own. Applying today's rate to the whole delay gives a number the debtor redoes in five minutes with the BOE table and argues about, rightly. The calculator above splits the period on its own and shows you the stretches.

The formula for each stretch is the usual one — amount × rate ÷ 100 × days ÷ 365 — and there are two details that also get done wrong. One: it is 365 days, not 360; the 360-day commercial year is a banking habit and with it the interest comes out 1.4% above what it should be. Two: you round once only, at the end; rounding stretch by stretch and adding up gives a different figure, and it is precisely the one that does not match when the other side checks it.

The €40 almost nobody claims

Article 8 says something worth reading in full: when the debtor falls into arrears, «deberá pagar al acreedor una cantidad fija de 40 euros, que se añadirá en todo caso y sin necesidad de petición expresa a la deuda principal» — they must pay the creditor a fixed sum of €40, added to the principal debt in every case and without any express request. It is not compensation that has to be substantiated or negotiated: it is automatic, and it is per unpaid invoice, not per customer.

And on top of those €40, if you have had duly evidenced recovery costs — a debt collection agency, a lawyer — they can be claimed too, with the invoice in front of you.

What this sum does not carry: VAT

Late payment interest is not part of the VAT taxable base. Article 78.Tres.1.º of Ley 37/1992 leaves it out, excluding compensation which «por su naturaleza y función, no constituyan contraprestación o compensación» — by its nature and function is neither consideration nor compensation — for a supply of goods or services. Interest compensates for the delay; it pays for nothing you delivered.

The practical consequence: if you pass the client an invoice for interest, that line goes at a zero rate and with a note saying why. Putting 21% on it is charging VAT that has never become chargeable: you declare too much and they cannot deduct it. And without the note in writing, whoever receives it will send it back asking for the VAT.

And one thing this law does not cover

Ley 3/2004 governs payments between businesses, and between businesses and public administrations. It does not apply to a private customer: if the person who owes you is a consumer, what governs is whatever you agreed and, failing any agreement, the statutory interest rate, which is set every year in the budget act and is a good deal lower than this one.