Legal Alert – Determining the legal interest on overdue liabilities
THE NEW GOVERNMENT DECREE FOR DETERMINING THE LEGAL INTEREST ON OVERDUE LIABILITIES IN BGN AND FOREIGN CURRENCIES
(IN FORCE AS OF 01.07.2012)
The Bulgarian Government Decree № 100 for determining the Legal Interest on overdue liabilities in BGN (leva) and foreign currencies (“the Legal Interest Government Decree”) was published in State Gazette, issue No. 42 on 05.06.2012, and entered into force as of 01.07.2012 repealing Government Decree № 72 for determining the Legal Interest on overdue liabilities issued in 1994 ( “Government Decree № 72 issued in 1994” ).
The following is a brief overview of the Legal Interest Government Decree.
The amendment in the current regulation is justified by the necessity of introducing DIRECTIVE 2011/7/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on combating late payment in commercial transactions in the Bulgarian legislation. In contrast to the European Directive, the Bulgarian Legal Interest Government Decree is applicable to all types of deals, not only to the commercial ones.
Legal Interest on Liabilities in BGN (leva)
The legal interest on overdue liabilities in BGN (leva) shall be the Base Interest Rate administered by the Bulgarian National Bank in force as of the 1st of January, respectively the 1st of July of the current year increased by 10 points. The legal interest in force as of the 1st of January of the current year is applicable for the first half of the current year, accordingly, the legal interest rate in force as of the 1st of July – for the second half of the year.
That rule applies for the below mentioned interest rates as well.
Legal Interest on Liabilities in EUR (euro)
The legal interest on overdue liabilities in EUR (euro) shall be the interest rate applied by the European Central Bank in the main refinancing operations in force as of the 1st of January, respectively the 1st of July of the current year increased by 10 points.