Germany: late-payment interest, reminders and limitation explained

When the debtor is in default

Interest and the flat fee exist only in default. It occurs when the debtor does not pay after a reminder following the due date; a lawsuit and service of an order for payment are equivalent to a reminder (§ 286 para. 1 BGB). No reminder is needed if a date is fixed by the calendar for payment, if the debtor seriously and finally refuses to pay or if immediate default is justified for special reasons (para. 2).

For invoices there is an additional rule: whoever does not pay within 30 days of the due date and receipt of the invoice is in default at the latest then (para. 3). Against a consumer that applies only if the invoice specifically points it out. The debtor is not in default as long as the lack of payment is not their fault (para. 4).

How high default interest is

A money debt must carry interest during default, at five percentage points above the base rate per year. For legal transactions in which no consumer is involved, it is nine percentage points for claims for payment (§ 288 paras. 1 and 2 BGB). The base rate changes on January 1 and July 1; the Bundesbank announces it (§ 247 BGB). It is 1.52% since July 1, 2026, after 1.27% in the first half of 2026; from 2013 to mid-2022 it was negative.

Example: on €1,000 against a consumer, from March 1 to June 30, 2026, 6.27% applies for 122 days, so €20.96, and from July 1 to September 30, 6.52% for 92 days, so €16.43: together €37.39. There is no default interest on interest (§ 289 BGB). Higher agreed interest and further damage remain possible (§ 288 paras. 3 and 4).

The €40 flat fee

The creditor of a claim for payment is, on default of a debtor who is not a consumer, also entitled to a flat fee of €40, also for instalments and part payments. It is credited against later damages for the costs of pursuing the claim (§ 288 para. 5 BGB). Against consumers it does not exist. An exclusion of default interest agreed in advance is invalid, that of the flat fee between businesses grossly unfair in case of doubt (para. 6).

Reminding and the court dunning procedure

Write a reminder with the amount, the due date and a clear payment deadline, and keep the receipt and proof of delivery. If the debtor does not pay, you can apply for an order for payment (Mahnbescheid) for a specific sum of money in euros (§ 688 ZPO), for example online at Online-Mahnantrag.de, an application of the German dunning courts. The court does not check whether the claim exists (§ 692 para. 1 no. 2 ZPO); the debtor has two weeks from service to pay or object (no. 3).

If they do not object, after the period you can apply for the enforcement order (Vollstreckungsbescheid) (§ 699 ZPO), within six months of service of the order for payment, otherwise its effect lapses (§ 701). The enforcement order is equivalent to a provisionally enforceable default judgment (§ 700): with it you can have the claim enforced. If the debtor objects, the matter is passed to the court and contested proceedings continue.

Limitation

The regular limitation period is three years (§ 195 BGB). It starts at the end of the year in which the claim arose and you knew, or without gross negligence should have known, of the debtor and the circumstances (§ 199 para. 1). An invoice from June 2026 therefore becomes time-barred at the end of December 31, 2029; without knowledge, after ten years at the latest (para. 4).

Limitation is suspended by a lawsuit and by service of the order for payment (§ 204 para. 1 nos. 1 and 3 BGB); the suspension ends six months after the end of the proceedings (para. 2). Claims finally established by a court and claims from enforceable deeds become time-barred only after 30 years (§ 197 para. 1 nos. 3 and 4); for future recurring payments it stays at three years (para. 2). So do not wait until the last day with the order for payment.