Misinterpreted collection flat rate

According to MAZARS, probably only the modification of the new Civil Code will solve the problem caused by the misinterpretation that affects tens of thousands Hungarian companies, making it obligatory for ‘lenders’ to charge a EUR 40 collection flat rate. The international audit and consulting group has pointed out that the EU directive in question only creates an opportunity, but the Hungarian legislators interpreted it to be mandatory practice, by this putting extra administrative burden on those affected. Experts say due to the primacy of EU legislation the Hungarian law needs to be amended. Directive 2011/7 EU on combating late payment in commercial transactions states that interest rates can be charged in the case of late payment but it isn’t mandatory to do so. However, section 6:155. § (2) of the new Hungarian Civil Code makes charging the EUR 40 flat rate obligatory for late payments. Gabriella Bohus, an audit partner of MAZARS told our magazine that the regulation not only creates lots of extra administrative work, but because of its contradictory nature can also result in mistakes in companies’ annual reports. MAZARS called partners’ attention to the new regulation in the Civil Code and asked them to calculate the sum of the collection flat rate irrespective of whether one wishes to charge it or not. Ms Bohus revealed that the results were shocking, especially at those firms that work with a large number of suppliers, companies that only make bank transfers weekly to optimise costs and businesses with cash flow problems