The European Parliament votes in favour of strict payment deadlines to protect small and medium-sized enterprises.

UM – 04/2024

The desire to bring as many legislative initiatives as possible to "trialogue maturity" in the expiring legislative period has been recognisable for weeks. This has been achieved in a number of difficult dossiers, such as platform work, the European Health Data Space and even the complicated pharmaceutical reform. In the case of the proposed regulation on late payment in commercial transactions, this was uncertain until the very end.

Clear majority in parliament

It was only with difficulty and two weeks' delay that the responsible Committee on the Internal Market and Consumer Protection (IMCO) was able to agree on a report on 25 March on the basis of the draft by rapporteurs Róża Thun and Hohenstein (RENEW, PL) and 91 amendments. The consultations focussed on the protection of 24 million small and medium-sized enterprises in the European Union (EU). However, only the destination was undisputed. The right path was the subject of intense debate. Burdened with an agreement that did not convince many MEPs, the discussion in plenary was expected to continue. 

On 23 April, the European Parliament's position was adopted with 459 votes in favour, 96 against and 54 abstentions, but without prior debate. Efforts to postpone the voting altogether failed, as did one or two of the 27 plenary motions aimed at making improvements. All amendments can be found here.

"Abolition of the freedom of contract"

A group led by Svenja Hahn (RENEW, DE) in favour of more freedom of contract in payment transactions also failed. Among other things, the rigid payment deadline of 30 days should be made more flexible in agreement with the contracting parties. After all, longer payment periods are often agreed for justified reasons to the benefit of both parties. This is also in line with the position of the German Social Insurance (DSV), which had called for exemptions for social insurance institutions in a statement. The majority of MPs did not see it that way. According to Hahn, the "abolition of freedom of contract" (96 no) is nothing less than "a frontal attack on the European economy".

No clarity for the health insurance companies' verification procedures

An amendment aimed at granting the contracting parties more contractual flexibility in auditing also failed to gain a majority. And within the limits of nationally applicable law and provided the agreements are not grossly unfair to the creditor. The possibility of agreeing longer verification and acceptance periods within the framework of the applicable national law would have made it sufficiently clear for statutory health insurance in Germany that the complex and lengthy verification procedures between health insurance and healthcare providers are not subject to the tight European deadlines.

Stricter deadlines for public bodies

What about the Council?

The Council does not yet have a position. In any case, the mood regarding the European Commission's proposal on late payment in commercial transactions is different there than in Parliament (see also DSV News 03/2024). According to Thun and Hohenstein, this is due to the fact that stricter legal regulations mean that government agencies also have to pay on time. However, they are relying on their Polish government, during whose Council Presidency from 1 January 2025 it should be possible to finalise the dossier.