The Directive from the perspective of the public sector

Late Payment Directive

Herald Bonnici

Director General (Financial Management & Policy) MINISTRY OF FINANCE, THE ECONOMY AND INVESTMENT

Late Payment DirectiveThe directive was transposed into the

Maltese law through Legal Notice 272 published on 14th of August 2012. The transposition forms part of the Commercial Code (Chapter 13 of the Laws of Malta).

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Late Payment Directive

Malta, together with Italy and Cyprus, was among the first Member States which notified the EC that measures had been taken to transpose the directive into national law.

Source – European Commission presentation titled “Directive 2011/7/EU on combating late payment in commercial transactions” , Ireland 2013

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Consultation Process

Stakeholders: Chamber of Commerce

General Retailers and Traders UnionMalta Business Bureau

Malta Federation of Professional Associations

Ministry for Fair Competition, Small Business and ConsumersMinistry for Justice and Home Affairs

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Transposition Process

Memo to CabinetLegal Notice 272 of 2012Commercial Code amended

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Information DisseminationMFEI Circular 8/2012 was issued;

Three information seminars were organised by the Ministry targeting Ministries and Departments, Public Sector Entities and Local Councils;

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Public Authorities "public authority" means the Government of Malta, the Local

Councils or bodies governed by public law, associations formed by one or several of such authorities or bodies governed by public law. For the purpose of this definition, "a body governed by public law" means a body which:

(a) is established for the specific purpose of meeting needs in the general interest, not being of an industrial or commercial nature;

(b) has legal personality; and

(c) is financed for the most part by the State, or Local Councils or other public bodies, or is subject to management supervision by those bodies, or has an administrative, managerial or supervisory board more than half of whose members are appointed by the State, Local Councils, or other public bodies.

The provisions of this directive apply to “public authorities” which have the same meaning as “contracting authorities” as defined by the Public Procurement Regulations. A list of such contracting authorities can be found in Schedule 1 of the said regulations. A copy is available through www.justiceservices.gov.mt.

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Late Payments – General Information Average duration to settle payments in commercial

transaction between public authorities and business – 89 days:

Data as at March 2012.

Data was collated from all public authorities i.e. ministries, departments, entities and local councils.

The figure is computed on creditor balances due to both businesses and also other public authorities.

This exercise is being repeated on an annual basis.

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Late Payments – General Information Average duration to settle payments in commercial

transaction between public authorities and business – 89 days:

- This is based on ‘Total Creditors Due’ as at March 2012 which totalled €90.2m.

- Sub-divided as follows:a) €3.6m contested;b) €29.5m within the 30 days;c) €57.1m older than 30 days, of which €38.1m older than 60 days.

- Split by nature:a) €8.3m due by local councils;b) €27.8m due by entities classified as public authorities; c) €54.1m due by Ministries and Departments.

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Late Payments – General Information

Finlan

d

Sweden

Norway

Eston

ia

Germ

any

Denm

ark

Latv

ia

Czech

Rep

ublic

Irelan

d

Switzer

land

Poland UK

Austri

aM

alta

Franc

e

Nethe

rland

Cypru

s

Slovak

ia

Hunga

ry

Lithu

ania

Belgium

Spain

Portu

gal

Bulgar

ia

Sloven

ia

Roman

iaIta

ly

Greec

e0

20

40

60

80

100

120

140

160

180

Source – European Commission presentation titled “Directive 2011/7/EU on combating late payment in commercial transactions” , Ireland 2013

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Late Payments – General Information At European level: In commercial transactions with public authorities the average

payment duration in days is 65.

Best Performers: Finland – 24 days Estonia – 25 days Norway – 34 days

Worst Performers: Italy – 180 days Greece – 174 days Spain – 160 days

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Discussion

Contact:Financial Policy and Management Divisionfpmd.mfei@gov.mt

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MINISTRY OF FINANCE, THE ECONOMY AND INVESTMENT