Change of the level of the prescribed interest rate for late payment

Pursuant to Article 2 (4) of the Act on Interest Rate for Late Payment ("ZPOMZO-1"), the Minister of Finance published the prescribed interest rate for late payment in the Official Gazette of the Republic of Slovenia, No. 2/2023 dated 6 January 2023.

The prescribed interest rate for late payments applies for six – month period starting on 1 January 2023, and now amounts to 10.5%.

The prescribed interest rate for late payments, which has remained at 8.0% since 2016, therefore ceased to apply on 31 December 2022.

According to the provisions of ZPOMZO-1, the prescribed interest rate for late payments is the leading interest rate of European Central Bank increased by 8 percentage points. The leading interest rate is the interest rate used by European Central Bank for main refinancing operations carried out before the first calendar day of the respective six-month period.

The prescribed interest rate for late payments is the annual interest rate at which interest is paid on monetary obligations from the date of the debtor's default until the date of payment. It does not apply if the creditor and the debtor so agree. The creditor and the debtor may therefore agree on an interest rate, which differs from the prescribed interest rate for the late payment. In this case, the creditor and the debtor are limited by the provision of Article 337 of the Obligation’s Code providing for the presumption of usurious interest. Pursuant to the aforementioned provision, an agreement, under which the interest rate for late payments and for contractual interest is more than 50% of the prescribed interest rate for late payments, is deemed to be a usurious contract, unless the creditor proves certain circumstances referred to Article 337 of the Obligation’s code. The presumption of usurious interest does not apply to commercial contracts.

The increase of the prescribed interest rate for late payment therefore resulted in the increase of the threshold for usurious interest, which is now 16% or above.