Belgium collection profile

 

Belgium
       

Belgium

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2014: 36/189 countries
2013: 32/189 countries
 
 


Complexity of collecting debt:

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Executive summary

  • Payment terms in Belgium are slightly higher than 35 days but DSO could be improved and transposition of EU rules on late payment in domestic law is not as demanding as in other EU countries.
  • Court proceedings are reliable and benefit from EU standards, but enforcing domestic judgments remains time consuming and costly, so that pre-legal action conducted by collection specialists remains the most efficient option when it comes to recovering debt.
  • Although domestic insolvency law aims at rescuing companies to increase the chances of recovering debts, it provides no limitations as to how much of the debt may be written off in restructuration negotiations and it is rare for unsecured creditors to recover from insolvent debtors in practice.
 
General Information GENERAL INFORMATION arrow-transparent
 
Collection Practices COLLECTION PRACTICES arrow-transparent
Court Proceedings Court PROCEEDINGS arrow-transparent
 
Insolvency Proceedings INSOLVENCY PROCEEDINGS arrow-transparent
 
General Information 

GENERAL INFORMATION

Days Sales Outstanding (DSO)

Payments in Belgium take place within 54 days on average, but payment terms are  55 days on average (2015 figures)

 

Late payment interest

In accordance with the law of August 2, 2002 (Loi sur la Lutte contre les Retards de Paiement) which transposed the Directive 2000/35/EC into Belgium law, late payment interests may be requested 30 days following the invoice's date of issuance. In practice, late payment interests ranging from 12% to 15% are mostly ruled by general terms and conditions, but these may also be calculated by taking as a basis the interest rate of the European Central Bank's refinancing rate (5,5% in 2013, reviewed twice a year by the Ministry of Finance and published in the Official Belgian Journal) increased by a minimum of 7 percentage points when the parties have not concluded any agreement to this extent. In July 2013 (about three months after the official deadline), the government proposed a law aiming at transposing the new Recast Directive 2011/7/EU on Late Payments. Under the new EU rules, failure to pay within a maximum of 60 days (for businesses, against 30 days for public authorities) would allow requesting late payment interests on the day following the due date mentioned on the invoice, but it is not clear at this stage whether the implementing law will reduce this time requirement. In addition, the ECB interest rate will be increased by a minimum of 8 percentage points. In July 2013 (about three months after the official deadline), the government proposed a law aiming at transposing the new Recast Directive 2011/7/EU on Late Payments. Under the new EU rules, failure to pay within a maximum of 60 days (for businesses, against 30 days for public authorities) would allow requesting late payment interests on the day following the due date mentioned on the invoice, but it is not clear at this stage whether the implementing law will reduce this time requirement. In addition, the ECB interest rate will be increased by a minimum of 8 percentage points.

As of March 2014, collection costs cannot be charged as such but may be covered by the penalties as agreed in General Terms and Conditions or given by a judge. Interests and penalties can be lowered to the effective collection costs in the framework of an amicable negotiation. Once Directive 2011/07/EU is transposed into law, by contrast, creditors should be entitled to receive a flat EUR 40 fee to cover its collection costs, whilst claiming extra compensation for any other reasonable costs (legal fees, recovery agency fees, etc.) occurring as a result of the debtor's late payment.

 
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collection practice 

COLLECTIONS PRACTICES

Orchestrated negotiation first

Although courts in Belgium are efficient and reliable, amicable settlement opportunities should always be seen as a strong alternative to formal litigation proceedings. In addition, before starting legal proceedings against a debtor, assessment of assets is important as it allows verification as to whether the company is still active and whether recovery chances are good. In addition, it is essential to be aware of the debtor’s solvency status: if insolvency proceedings have been initiated, it indeed becomes impossible to enforce a debt (see below).

 
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Court Proceeding 

COURT PROCEEDINGS

Procedures in Belgium are regulated by the Judicial Code of October 1967 (as amended). The courts are not bound by a case law system, but precedents nonetheless constitute a significant source of authority. First instance tribunals (tribunal de première instance / rechtbank van eerste aanleg), and Courts of Commerce (Tribunal du Commerce / rechtbank van koophandel) are present through a network of twenty-seven District Courts whilst a hundred and eighty seven Justices of Peace (Juges de Paix / vrederechter) rather deal with small claims not exceeding EUR 1,860. The decisions rendered in first instance may be brought before five Courts of Appeals (Cour d’Appel / Hof van beroep) dealing with all civil, commercial and criminal cases. The Supreme Court (Cour de Cassation / Hof van cassatie) operates at the highest level together with the Administrative Court (Conseil d'Etat / Raad van Staat) and the Arbitration Court which name is misleading insofar as it is competent exclusively on constitutional matters (Cour Constitutionnelle / Grondwettelijk Hof).

Various options exist when the claim is certain and undisputed. First, bills of exchange left unpaid may be brought to the National Bank to obtain formal recognition (prôtet) and registration of the debtor's failure to pay in a registry (le Journal des Protêts). A fast track procedure conducted by the Justice of the Peace allows obtaining Payment Orders for claims below EUR 1,860 (Procédure Sommaire d'Injonction de Payer), however it is hardly used in practice because it is perceived as being overly constraining. A legislation proposal has recently been submitted to the Parliament with the aim of abolishing the EUR 1,860 threshold whilst granting jurisdiction to Commercial Courts. When the debtor company has assets in other EU Member States, a European Payment Order procedure facilitating the recovery of undisputed debts (under Regulation EC No 1896/2006) may furthermore be triggered before the Justices of the Peace, the court of first instance or the Commercial Court). In this case, the demanding party may request a domestic court to issue an Order to Pay which will then be enforceable in all European Union countries (except Denmark) without exequatur proceedings. If the amicable phase fails or if the debtor questions the claim, the option of starting legal proceedings remains. Formal legal proceedings may commence following a voluntary action of the parties (comparution volontaire / vrijwillige verschijning), or once a Writ of Summons is served to the defendant and the claim has been registered with the court. Legal action thus takes the form of a full lawsuit before the Commerce Tribunal, but these tend to be short, efficient and fairly cheap. If the defendant does not challenge the claim, the courts usually render a default judgment within a month, awarding the amount claimed in the Writ (Article 770 of the Judicial Code). If the claim is challenged, however, the parties may be required to provide briefs whilst the court establishes a procedural planning for the trial. The court then issues a judgment which only acquires res judicata value (autorité de la chose jugée / gezag van het rechterlijk gewijsde) once it is deemed definitive (i.e. when all appeal venues have been exhausted). The courts would typically award remedies in the form of damages, specific performance or any form of declaratory relief, but they are not entitled to award punitive damages. As a general rule, there is no discovery principle in civil proceedings, which implies that the parties must bear the burden of proving their claim. Proceedings are conducted exclusively in French in Wallonia and in Dutch in Flanders. Both languages are possible in Brussels, according to the circumstances of the case, and German can be used (instead of French) as the language of proceedings in the small German-speaking region. It is worth emphasizing that, as a general rule, the competent court is chosen in accordance with the contract’s General Terms and Conditions rather than on the basis of the debtor’s language.

 
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insolvency Proceeding 

INSOLVENCY PROCEEDINGS

By law, a debtor who is no longer able to pay its debts as they fall due, and who is unable to obtain further credit is deemed insolvent. The Belgian Parliament adopted the 2009 Law on the Continuity of Undertakings (loi relative à la continuité des entreprises / wet betreffende de continuïteit van de ondernemingen) which aims at avoiding business from going bankrupt by fostering the recovery of companies facing financial difficulties. This law has replaced the 1997 law on judicial composition (wet betreffende gerechtelijk akkoord / loi relative au concordat judiciaire) and the mechanism it created is increasingly relied upon.

 
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