Spain sets up Observatory on Late Payment for the private sector

One of the most important initiatives that will be brought about by the creation of the State Observatory on Late Payment (Observatorio Estatal de la Morosidad Privada) is the preparation and publication of a list of companies that fail to meet payment deadlines.

The drawing up and publication of this list will not take place, however, until an electronic invoicing system has been implemented in the private sector.

On 1 May 2024, the Royal Decree 439/2024 of 30 April was published in the Spanish Official State Gazette that introduced significant developments in the fight against late payment in commercial transactions between private companies.

Promoting a fair payment culture

One of the measures is the creation of the State Observatory on Late Payment, which is a collegiate body attached to the Spanish Ministry of Industry and Tourism and aims to promote a responsible and fair payment culture. The observatory is to be set up before 2 July 2024, within two months of the entry into force of the Royal Decree.

The new organisation will seek to promote dialogue and intercommunication between public administrations and the economic and social players. Its main objective is to change the mindset of the economic and social players in order to reduce late payment in commercial transactions.

Observatory functions

The Spanish Observatory on Late Payment has, among other things, the following functions: 

• Monitoring the evolution of average payment periods and late payment in commercial transactions between private companies.
• Preparing an annual report on the situation of payment periods and late payment in commercial transactions between private companies.
• Drawing up and publishing an annual list of companies that fail to meet payment deadlines.

Companies on the list

The observatory will prepare a list of private companies that fail to meet payment deadlines under the law on measures to combat late payment in commercial transactions (Law 3/2004, of 29 December), where the following circumstances apply:

• On 31 December of the previous year, the total amount of unpaid invoices within the time limit established by the law on measures to combat late payment in commercial transactions exceeds €600,000.
• The percentage of invoices paid by the company during the previous financial year in a period shorter than the maximum period established in the regulations on late payment is less than 90% of the total payments made to suppliers.
• They are legal entities which, in accordance with accounting regulations, cannot present the abridged profit and loss statement.

Drawing up and publication of the list

The observatory will draw up an annual list of companies, using 31 December of the previous year as the reference date, based on the information regarding the effective and complete payment of  invoices provided by the public administration body in charge of managing the public e-invoicing solution.

The Royal Decree establishes that the list will be compiled when an electronic invoicing system has been implemented in the private sector and the necessary information and technical resources are available for its compilation. However, the relevant regulatory development will have to be approved before the system is implemented in the private sector.

This list will include the company's full name, tax identification number, CNAE (Spanish Classification of Economic Activities) code of its main activity and the total amount of invoices outstanding at the reference date for which the maximum legal payment period established in article 4 of the law on measures to combat late payment has been exceeded. Natural persons or individual entrepreneurs shall not be included on the list.

Before each year end, the list will be published on the ipyme.org website. 

All companies concerned will be informed that they are to be included on the provisional list before it is published and they will have 10 days to put forward arguments and provide documents in their defence.

Osborne Clarke comment

The creation of the Spanish Observatory on Late Payment is an important step towards achieving a responsible and fair payment culture in commercial transactions between private companies. The publication of a list of defaulting companies will provide relevant information to take more informed business decisions.