Collect from Spanish Government

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3 min.

The Spanish public entities (“administraciones”) hold an important debt with private entities, whether they be professionals or corporations, Spanish or foreigners. A brief look at the figures show how on 2015 a debt from town halls only of 29.024.688.000 according to the Spanish Ministry of Tax and Public Administrations, with the city hall of Madrid on top of te list with a figure of 4.767.315.000 euros.

This should be no problem as long as such public entities paid for it on time and kept their suppliers happy that they have such nice business. But that is not really like it, so unhappy suppliers, some of them, sell their debts to third parties who claim them to the public entities afterwards.

In such scenario, the Court of Justice of the EU delivered an opinion (Case C-555/14), under the request from a Spanish Court for Contentious Admnistrative Proceedings. The Spanish Government passed a law on urgent measures to combat late payments by the public entities and to support local authorities with financial problems (RDL 8/2013).

In virtue of such law, the local entities were waived from their obligation to pay collections costs and interest, in case they would pay immediately to their suppliers.

However, the late payments Law (Ley 3/2004) deeming for the EU Directive 2000/35, obliges supplier, public entities included to pay for it.

Considering this, arises the following question: Can a company who received immediate payment of the principal only and based on the procedure as per RDL 8/2013, claim interests and collection cost afterwards or not?

The reply from the Court of Justice was no, it cannot. But the supplier can choose not enter such procedure (RDL 8/2013) in which case it would be free to claim the payment of interest and cost after having received the principal.

So, there you go. If you have as a client a Spanish public entity (i.e, town halls, hospitals, local or regional governments, universities, other) and they are not paying, feel free to decide whether or not to accept immediate payment as per the mentioned procedure, but be aware that you necessarily renouncing to interests and costs.

Debt Collection in Spain
Does your company have a Spanish customer who is not paying your invoice? Our Spanish collection attorneys have the means to make your debtor pay.