This is how the new Spanish Late Payment Law can affect your transport business

Last October 2nd, the Spanish government announced its new Late Payment Law. This regulation that will imply penalties for companies that do not make payments within a maximum period of 60 days from the provision of a transport service.

With this new law, which aligns with the European policies for the control of late payments, Spain aims to put an end to one of the sector's common problems, which also affects other European countries, and which have been aggravated by the pandemic.

Fines for late payments and loss of good reputation

The new Spanish regulation will now consider as a very serious infringement payment terms of more than 60 days for amounts of over than 3.000 euros. A serious infringement will be considered the payments that the amounts are equal to or less than the above-mentioned amount.

The fines foreseen after the reform, range from 401 euros to 30.000 euros. Amounts that can be very high, especially in the event of a repeated offence in the last 12 months by the offender (a minimum of 6.001 euros, which can reach up to 18.000 euros depending on the amount) or if the maximum legal period of 60 days has been exceeded by more than 120 days, in which case the penalty would reach 30.000 euros.

These sanctions could also lead to the loss of good reputation, a fundamental requirement to operate in the transport sector in this country. If this were to occur, it would imply the disqualification of the manager of the company (or administrators in the case of companies), in addition to the revocation of the transport authorization of which the company is the holder for a minimum period of one year.

How does the Spanish late payment law affect Europe?

If the person paying is located in Spain, it is clear what the repercussions of the law may be; But what happens if the payer is outside the Spanish borders? To resolve this question, we asked Ramon Valdivia, president of the Association of International Road Transport (ASTIC), who points out that, "although the transportation contract in many cases would be subject to Spanish legislation, it is very unlikely that the Ministry of Transport Inspection would be able to enforce sanctions on entities located outside of Spain”.

A Late Payments Law with doubts in its application

Questions also arise about other aspects of the law. Firstly, those related to limitations on effectiveness, since it is very likely that, from now on, contracts will include clauses stipulating the payment deadline to avoid administrative penalties. In other words, penalties for failure to meet the payment deadline could be avoided by a prior agreement between the parties.

Furthermore, it is not clear when the days that would stipulate the payment period start to run: from the time of invoicing or from the actual performance of the transportation? Likewise, it is not specified whether the fines are to be applied per invoice or service, or for a set of delays of a debtor to the same creditor.

Be that as it may, the new Spanish Late Payment Law is a reality that may set precedents with great implications for the future of freight transport throughout Europe. However, for the time being, we will have to stay tuned to see how it evolves and whether other countries decide to follow Spain's footsteps.