Applicable Legislation

Payment term in commercial operations in Spain is regulated by Law 15/2010 of July 5th, modifying Law 3/2004 of December 29th, which was later amended on December the 4th of 2014, making it more demanding and stricter. Specifically, in the term of payments and collections, in which the possibility of particular agreements extending the payments was eliminated. 

According to the Law the payment period must cover 60 maximum days after the date of receipt of the goods or provision of services. This payment term cannot be extended by agreement between the parties, the freedom to negotiate has been limited to the period legally established.

 

Consequences of extending the term 

Law 15/2010 gets going the clauses agreed between the parties on the date of payment or the consequences of the delay that differ in terms of the payment term established in the Law, will be null and void

In addition to the nullity of the clause, the delay in payment terms beyond the legal limits will be object of a remark in the Audit report on annual accounts. Corporate companies must include a note related to the recovery date in the normal model of the memory of their individual annual accounts, proving whether the deferred collections from the clients or the payments to suppliers are within the legal limits and may be used as evidence in the possible legal actions of the non-complying companies.

Responsibilities may be requested from the Administrator or Director, by creditors and/or shareholders. According to the Royal Legislative Decree 1/2010, it is company Administrator´s duty to manage it diligently, understanding duty, as strict compliance with current national and international legislation. Therefore, the breach of the payment terms established by Law could give rise to the term of Administrator´s responsibility, either for damage caused by omissions contrary to the law or for the breach of his diligent administration duty.

¹Article 4.1.a) of Law 15/2010: The payment period to be met by the debtor shall be the following: a) Sixty days after the date of receipt of the goods or provision of services. This payment term cannot be extended by agreement between the parties.
²Article 9 of Law 15/2010: The clauses agreed between the parties on the date of payment or the consequences of the delay that differ in terms of payment term will be void.

 

Proposal for a Law to extend the sanctioning regime

The current Law 15/2010 on late payment that regulates payment terms does not include other sanctioning regime. However, in June 2017 the processing of the Proposal for the Law to Strengthen the Fight against Late Payment in Commercial Operations was initiated by “Ciudadanos” Parliamentary Group, whose intention is to modify the Law 15/2010 on Measures to Fight against Late Payment and to provide it with a sanctioning regime that allows punishing those who are late in the legal  maximum payment periods.

 

Conclusions

The payment term cannot be extended any longer than 60 days by agreement between the parties (30 days when the payer is a Public Entity).

The Audits will review that the average period of payment to suppliers or clients´ collection is reflected in their annual accounts, and that they are within the legal limits (60 days maximum), as well.

Non-compliance with legal payment terms could generate Administrator´s responsibility, either for the damage caused by omissions contrary to the law or for the breach of his duty of diligent administration.

³Article 6 of the Resolution of the Institute of Accounting and Audit of Accounts of January 29th, 2016 on the information to be incorporated in the annual accounts report in relation to the average period of payment to suppliers in commercial operations.

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