Late payment interest (nokavējuma procenti)

Late payment interest (nokavējuma procenti) is compensation a creditor can claim for late payment of a money debt. Unless the contract sets another rate, statutory interest on late payment in commercial transactions is the base rate plus eight percentage points a year (Section 1765 of the Civil Law).

The base rate is the rate the European Central Bank applied in its most recent main refinancing operations before the first day of the half-year concerned, and it applies for six months. In contracts with consumers statutory interest is six per cent a year, which is also the general statutory rate.

In commercial transactions a creditor that has performed its own obligations can claim interest from the day after the due date without a reminder, plus EUR 40 of recovery costs. A contract term under which the creditor waives late payment interest is grossly unfair.

Interest is charged on the principal only. If the contract also sets a penalty for late payment, the penalty can only be claimed to the extent that it exceeds the interest already claimed.