Penalty interest (late payment interest)

In tax matters late payment interest accrues from the day after the due date until the tax is paid, at a rate set by national law, often the central bank rate plus a margin. It is charged automatically and cannot be deducted as an expense in most countries. Separate fixed penalties apply for late filing, and surcharges for tax assessed after an audit.

In commercial relations the EU Late Payment Directive gives every business the right to statutory interest when a customer pays an invoice after the agreed date or after thirty days, plus a fixed compensation of at least EUR 40 for recovery costs. The rate is the ECB reference rate plus eight points, or a national equivalent outside the euro area. Public bodies must pay within thirty days. Kontevia shows overdue invoices and can add the statutory interest to reminders.