The European Order for Payment and Denmark: What You Need to Know
The EU has a common procedure for cross-border payment orders, but Denmark is not part of it. Here is what that means for Danish businesses with customers in the EU, and what you can do instead.
What is the European order for payment?
The EU has adopted a common procedure for a European order for payment (Regulation No 1896/2006). It makes it possible to obtain an enforceable title for undisputed monetary claims in cross-border cases using standard forms. There is also a European small claims procedure (Regulation No 861/2007) for claims up to EUR 5,000.
For a Danish business with customers in Germany, Sweden or France, that sounds like the obvious choice. But there is an important catch.
Denmark does not take part
Because of Denmark's opt-out in the area of justice and home affairs, Denmark is not bound by the regulations on the European order for payment and the European small claims procedure, and they do not apply in Denmark. Decisions under these procedures are also not recognised in Denmark under these rules.
This means that as a Danish business you should not count on being able to use the procedures. Whether there is nonetheless an option before a court in another EU country in a specific case is something to clarify with a lawyer in that country.
Expert tip: Don't be misled by EU guides
Many guides to debt collection in the EU present the European order for payment as the easy solution. Always read the small print: Denmark is typically listed as an exception. Plan your recovery around the options that actually apply to you.
What can you do instead?
1. Use a debt collection partner in the customer's country
The most practical solution is often to have a debt collection agency or lawyer in the customer's country recover the claim under local rules. They know the language, the requirements for reminders and the national procedures, for example simplified payment procedures before the local courts or authorities.
2. Get a Danish judgment and enforce it abroad
Through a special parallel agreement with the EU, Denmark is bound by the rules of the Brussels I Regulation on jurisdiction and the recognition and enforcement of judgments in civil matters. This means a Danish judgment can as a rule be recognised and enforced in the other EU countries. Whether the case can be brought in Denmark depends on the rules on jurisdiction, for example what you have agreed, or where the goods were to be delivered.
3. Local court procedures
Most EU countries have their own simplified procedures for undisputed monetary claims. A local lawyer or debt collection agency can typically use them on your behalf.
Interest and compensation in the EU
The EU directive on combating late payment in commercial transactions has harmonised some of the rules on interest and compensation between businesses in the member states. In Denmark it is implemented in the Interest Act, under which you can claim fixed compensation of DKK 310 from business customers (section 9 a of the Interest Act). Other EU countries have corresponding rules on fixed compensation and late-payment interest, but rates and details follow each country's legislation.
Expert tip: Agree governing law and jurisdiction in your terms of sale
State in your terms of sale that Danish law applies and that disputes are decided by a Danish court. Between businesses, this as a rule lets you bring the case in Denmark and then enforce the judgment in the customer's country. Special protective rules apply to consumers.
Prevent the problems
- Credit check foreign customers before giving credit: use credit information from the customer's country
- Use prepayment, a letter of credit or credit insurance for larger orders
- Invoice correctly under the VAT rules for sales to other EU countries
- Keep documentation of the agreement, delivery and correspondence
Getting started
The European order for payment is not a solution for Danish businesses, but there are good alternatives. Through InkassoHurtig you can get no-obligation quotes from police-authorised debt collection agencies and lawyers, including partners with experience of recovery in other EU countries. This content is general information and not legal advice.