Pursuant to the amendment to the Commercial Code effective on 1 July 2013, in addition to late payment interest, creditors may also demand the reimbursement of costs incurred in collecting the debt. The scope and the conditions are set forth in the amended Guidelines, which set the late payment interest rate and provide for late payment charges pursuant to the Civil Code.
Is it Fair?
Under the new provision in the Guidelines, a collection fee was set at least CZK 1,200 for each claim. The fee applies to transactions between businesses and transactions between a business and a public authority receiving goods or services for a fee.
It must be emphasized, however, that the transitory provisions state that creditors may claim the one-off collection fee only in the case of payment defaults occurring after 1 July 2013. It is also important to note that the one-off collection fee will only apply to transactions between businesses or between a business and a public authority and will not apply to parties that are not businesses. For the latter, things will be a little more complicated.
Businesses Will Be Better Off
The Civil Code provides that costs associated with collecting a debt constitute a charge due under the debt. Although the charge could be claimed even prior to the amendments to the Commercial Code and the Guidelines, the party claiming it had to prove the amount of its costs and whether they were reasonably incurred. In some cases the party had to prove other factors, such as the contractual arrangement regarding the compensation.
It is now the case that if a debtor defaults on its payments in transactions between businesses after 1 July 2013, the statute gives creditors the right to claim a one-off collection fee of CZK 1,200. Creditors can simply add CZK 1,200 to the debt when informing the debtor that payment is due. Should it wish to claim more, the creditor will have to prove the amount in the manner described above. For parties who are not businesses, this burden of proof will apply to all transactions.
What Will the New Civil Code Bring?
The New Civil Code, due to take effect on 1 January 2014, should not result in any substantial changes to the matters outlined above. Although it will abolish both the current Civil Code and the Governmental Guidelines which impose the late payment interest and late payment charges available under the Civil Code, the government is expected to issue new guidelines with similar rules applicable to one-off payments. This is because the amendment was first introduced to reflect EU rules.