Invoicing · 8 min read
When a Client Doesn't Pay: Default, Late Payment Interest and the €40 Fee in Germany
The work is done, the invoice has gone out, the payment term has passed, and nothing arrives. For freelancers and small firms this is more than an annoyance, because rent, taxes and insurance do not wait. German law gives you clear tools for this situation: statutory default interest, a €40 flat fee when the client is a business, and the right to claim further costs.
This guide explains when a debtor is in default under German law, what follows from it and how to calculate it correctly. It is based on sections 286, 288, 289 and 247 of the German Civil Code (BGB) and the base rate published by the Deutsche Bundesbank. Status: October 2026. If a dispute escalates, get advice from a lawyer.
When is a client legally in default?
An invoice being due is not enough on its own; the rights described here only arise once the debtor is in default (Verzug). The basic case in section 286(1) BGB is the reminder: if the client fails to pay after a reminder sent once payment has fallen due, the reminder puts them in default. Filing a claim or serving a court payment order has the same effect.
Often you do not need a reminder at all. Under section 286(2) no. 1 BGB, default begins without a reminder if the time for payment is fixed by the calendar. A specific date on the invoice, such as payable by 15 November 2026, is therefore the safest wording, provided it was agreed. Other cases that need no reminder include a serious and final refusal to pay and special circumstances.
As a fallback, the 30-day rule in section 286(3) BGB applies: a debtor is in default at the latest if they do not pay within 30 days of the invoice falling due and being received. Towards consumers this only applies if the invoice specifically pointed out this consequence. If it is unclear when a business client received the invoice, the 30 days run from receipt of the goods or service. There is no default as long as the delay is due to circumstances the client is not responsible for.
- A reminder after the due date (section 286(1))
- A payment date fixed by the calendar, no reminder needed (section 286(2) no. 1)
- At the latest 30 days after due date and receipt of the invoice (section 286(3))
How high is default interest?
Section 288 BGB sets the rate relative to the base rate: five percentage points above it when a consumer is involved, and nine points above it for payment claims between businesses. The base rate under section 247 BGB changes on 1 January and 1 July and is published by the Deutsche Bundesbank.
It stood at 1.27 % in the first half of 2026 and has been 1.52 % since 1 July 2026. That means 10.52 % a year between businesses and 6.52 % towards consumers at present. The next adjustment is due on 1 January 2027. If a claim runs across one of these dates, each period is calculated at the rate valid in it.
There is no interest on interest: section 289 BGB states that no default interest is payable on interest. A higher rate based on another legal ground, such as a valid contractual agreement, remains possible. If the debtor is not a consumer, an agreement made in advance that excludes default interest is void.
The €40 flat fee and further costs
If the debtor is not a consumer, section 288(5) BGB also entitles you to a flat fee of €40, including for instalment or partial payments. You are entitled to it whether or not you actually incurred costs. Legal costs, such as a lawyer's fees, can be claimed as further damage, and the flat fee is credited against them.
Excluding the flat fee in a contract is presumed to be grossly unfair and therefore void. Consumers do not owe the flat fee, although you can still claim damage caused by the delay if you can prove it.
Check your payment terms as well. Under section 271a BGB, an agreement that lets the customer pay more than 60 days after receiving the goods or service is only valid if it was made expressly and is not grossly unfair to you. Stricter limits apply to public-sector customers.
A worked example
An invoice for €1,190 including VAT to a business was due on 31 May 2026, and you calculate up to 31 October 2026. Default begins on 1 June, which gives 153 days. The 30 days of June carry 10.27 % (1.27 % plus 9), and the 123 days from July onwards carry 10.52 % (1.52 % plus 9).
Calculated on actual days divided by 365, that is €10.04 for June and €42.19 for July to October, a total of €52.23 in default interest. Add the €40 flat fee, and the total claim comes to €1,282.23. If the client were a consumer, the interest would be €32.28 and there would be no flat fee.
Toolula's Late Payment Interest Calculator works exactly this way. You enter the Unpaid amount (gross), the Due date and Calculate until, and choose Business or Consumer as the Debtor. The result shows the default interest with the days in default and the annual rate, the Flat fee (§ 288 (5) BGB) and the Total claim. Calculation by period lists each period with its rate. As due date, enter the last day before default begins; under the 30-day rule, that is the 30th day after the invoice fell due and was received.
Chasing payment without burning bridges
The law does not require three reminders. A single clear request for payment after the due date is enough to trigger default, and with a calendar payment date you do not even need that. For the sake of the client relationship, a friendly sequence still works well: first a short payment reminder quoting invoice number, amount and bank details, then a clear formal reminder with a new deadline and the calculated interest and flat fee.
If that fails too, the German court payment order procedure (Mahnverfahren) is a comparatively inexpensive route to an enforceable title. Keep the limitation period in mind: the standard period is three years and starts at the end of the year in which the claim arose. An invoice from 2026 therefore usually becomes time-barred at the end of 31 December 2029, and a simple reminder letter does not stop that clock.
Frequently asked questions
Do I have to send a reminder before charging default interest?
Not if the invoice carried an agreed payment date fixed by the calendar; default then begins the day after. Without a fixed date, you need a reminder, or the 30-day rule of section 286(3) BGB applies, which for consumers requires a notice on the invoice.
What is the current default interest rate in Germany?
Since 1 July 2026 the base rate has been 1.52 %. That gives 10.52 % a year between businesses and 6.52 % towards consumers. The rate changes on 1 January and 1 July.
Can I charge the €40 fee to private customers?
No. The flat fee under section 288(5) BGB only applies if the debtor is not a consumer. From private customers you can only claim damage caused by the delay that you can actually prove.
Is interest charged on the gross or net amount?
On the amount the client owes, which for invoices with VAT is usually the gross amount. That is why Toolula's calculator asks for the unpaid amount including VAT.
How long can I still claim an unpaid invoice?
Usually three years, counted from the end of the year in which the claim arose. For a claim from 2026, the period normally ends at the close of 2029. A reminder letter alone does not suspend the limitation period.