The Danish Interest Act: Late-Payment Interest for Businesses

Why the Interest Act matters to your business

When a customer pays late, you are in principle entitled to interest. Interest compensates you for not having the money, and it gives the customer a financial incentive to pay. The rules are in the Danish Interest Act (renteloven) and apply unless otherwise agreed, with important limits where the debtor is a consumer.

Incorrect interest calculations are one of the most common errors in reminders and debt collection claims. Here is what the Act actually says.

When does interest start to run?

Under section 3 of the Interest Act:

• If the due date is fixed in advance, for example by a payment deadline on the invoice, interest runs from the due date.
• If no due date has been fixed, interest runs once 30 days have passed after you sent or made a request for payment.

So you do not need to send a reminder before interest starts to run if there is a fixed due date. Between businesses there are also special rules on how long payment terms may be agreed (section 3 a): payment terms of more than 30 days require the creditor's express acceptance.

Late-payment interest: reference rate plus 8 percentage points

Under section 5 of the Interest Act, late-payment interest (morarente) is an annual rate equal to the reference rate plus 8 percentage points. The reference rate is Danmarks Nationalbank's official lending rate as set on 1 January and on 1 July. The rate on 1 January applies for the first half of the year, and the rate on 1 July for the second half.

The 8-point markup is the same whether the debtor is a business or a consumer. The difference is that the rule cannot be departed from by agreement to a consumer's detriment (section 7), while businesses can to some extent agree other terms.

Example using the 2024 rates: Danmarks Nationalbank's lending rate was 3.75% on 1 January 2024 and 3.50% on 1 July 2024. Late-payment interest was therefore 11.75% p.a. in the first half of 2024 and 11.50% p.a. in the second half. The rates change when Nationalbank changes its rate: always check the current rate before calculating a claim.

What is litigation interest?

"Litigation interest" (procesrente) is the everyday term for interest running once a claim has been brought before the courts. It is not a separate, higher rate: the interest is calculated under the same rules as late-payment interest in section 5. If the claim has no due date fixed in advance, interest can instead run under section 8 of the Interest Act from the day you begin legal proceedings, for example with a payment order or a lawsuit.

When a court gives judgment, it typically awards interest under the Interest Act from the due date or from when the case was brought until payment is made.

Fees and compensation on top of interest

In addition to interest you can claim:

• A reminder fee of at most DKK 100 per reminder, for no more than 3 reminders at least 10 days apart (section 9 b)
• Fixed compensation of DKK 310 if the debtor is a business (section 9 a)
• Debt collection costs within the caps set by the executive order on out-of-court collection costs, if the case is sent to debt collection after a correct letter of demand

Worked example: from invoice to debt collection

Scenario: your company invoices a business customer DKK 200,000 with 30-day payment terms. The customer only pays 180 days after the invoice date (that is, 150 days after the due date) and the whole period falls within the first half of 2024.

• Days 1–30: no interest; the claim is not yet due.
• Day 31: late-payment interest starts running at 11.75% p.a.
• Along the way: you send reminders (DKK 100 each), claim the DKK 310 fixed compensation and finally send a debt collection notice with a deadline of at least 10 days.
• Total interest: 200,000 × 11.75% × 150/365 = DKK 9,657.53.

Can you agree a different rate?

Between businesses, a different interest rate can in principle be agreed in your terms of sale and delivery, as long as the agreement is clear and not unreasonable. Towards consumers, the Interest Act's rules cannot be departed from to the consumer's detriment. In special cases the court can also set a different rate (section 5(3)).

Practical recommendations

• Put a clear due date on every invoice so interest runs from the due date
• Always use the reference rate that applies to the relevant half-year
• Keep fees within the Interest Act's caps
• Use an accounting program that calculates interest and reminder fees automatically

Getting started

Correct interest calculation ensures you receive the compensation you are entitled to without giving the debtor a reason to dispute the claim. If you are unsure about a specific claim, seek advice: through InkassoHurtig you can get no-obligation quotes from police-authorised debt collection agencies and lawyers. This content is general information and not legal advice.