Brussels: Europe and the Arabs
The European Commission decided on Wednesday to refer Portugal and Slovakia to the Court of Justice of the European Union for failing to properly apply the rules under the Late Payment Directive.
A statement issued by the Commission's headquarters in Brussels said that late payments have a negative impact on companies, as they reduce companies' liquidity, inhibit growth, impede resilience, and possibly hinder efforts to become greener and digital.
In the current economic context, companies and especially small and medium enterprises rely more on regular payments to work and maintain employment. The Late Payments Directive requires public authorities to pay their bills within 30 days (or 60 days for public hospitals).
  By adhering to these payment deadlines, public authorities are setting a good example in combating bad payment culture in the business environment.
After extensive monitoring procedures carried out in 2022, the Commission is now referring Portugal and Slovakia to the Court of Justice of the European Union, given continued non-compliance.
In the case of Slovakia, the Commission referred the case to the Court of Justice due to excessive delays in payments by public hospitals to their suppliers.
The Commission launched the breach procedure in 2017. These excessive payment delays by public hospitals hinder the competitiveness and resilience of companies operating in the health sector, especially small and medium enterprises. During the COVID-19 crisis, these companies have played a critical role in keeping hospitals running.
In the case of Portugal, the referral to the Court of Justice was made due to the late payment of several layers of public administrations. After launching the measure in 2017, the commission monitored the situation closely, but found that not enough improvements had been made, particularly in the autonomous regions of Azores and Madeira.
Late payment causes administrative and financial burdens that are particularly acute when companies and customers are located in different European Union countries. Cross-border trade is inevitably affected.
To address this, the European Union adopted Directive 2011/7/EU on combating late payments in commercial transactions in February 2011. The Directive lays out stringent measures that, when properly implemented by EU countries, will significantly contribute to employment, growth and improvement in liquidity Business.
Member states have a special responsibility to ensure that public authorities make timely payments for the goods and services they purchase. The Commission supports Member States to more effectively enforce the provisions of the Directive, including by providing stronger monitoring and enforcement tools. The Commission is currently establishing a European Observatory for Payments in Commercial Transactions as announced in the Industrial Strategy Update approved in May 2021. In addition, the Commission is also working on revising the Late Payment Directive. The review aims to address regulatory deficiencies and gaps, promote timely payments and achieve a better balance between large and small operators.