Late payment interest in Bulgaria: how it is calculated

Late payment interest in Bulgaria is compensation the client owes by law when it does not pay an invoice by the due date; it runs from the day of default (Art. 86, para. 1 of the Obligations and Contracts Act, ЗЗД). From 1 July to 31 December 2026 the annual rate is 10.40%, and the daily rate is 1/360 of it. In a commercial transaction the creditor is also entitled to at least €40 compensation for recovery costs, without a payment demand (Art. 309a, para. 1 of the Commerce Act, ТЗ).

What is the statutory late payment interest rate in 2026

The statutory late payment interest rate in Bulgaria for 2026 is 10.15% a year for the first half and 10.40% for the second. From 1 January 2026 the annual rate is the European Central Bank (ECB) interest rate on main refinancing operations in force on 1 January or 1 July, plus 8 percentage points (sole article, para. 1 of Council of Ministers Decree No. 426 of 2014, ПМС № 426/2014, as amended in State Gazette issue 115 of 2025). The rate in force on 1 January applies to the first half of the year, and the rate in force on 1 July to the second (para. 3).

The BNB stopped announcing its base interest rate from 1 January 2026; the last value is from 1 December 2025. A delay that began in 2025 is calculated at the old rate up to 31 December 2025 and at the new rate from 1 January 2026. The ECB raised its main refinancing operations rate to 2.65% from 16 September 2026. That does not change the statutory rate before the end of 2026, because the second half of the year uses the rate in force on 1 July.

How to calculate late payment interest

Late payment interest is calculated as: unpaid amount × annual rate × days of delay / 360. The divisor is 360, not 365, because the daily statutory rate is 1/360 of the annual rate (para. 2 of Decree No. 426/2014).

• 01Unpaid amount: the full amount payable on the invoice, VAT included, less anything already received. The client owes the whole amount, so interest runs on the VAT as well.
• 02Start: the day after the due date. When the day of performance is fixed, the debtor is in default once it has passed (Art. 84, para. 1 of the Obligations and Contracts Act).
• 03End: the payment date. For a bank transfer, the obligation is discharged when the creditor's account is credited (Art. 75, para. 3 of the Obligations and Contracts Act).
• 04A period that crosses 1 January or 1 July is split into parts, and each part uses its own rate.

The examples here count the payment date. If you do not count it, the delay is one day shorter.

Example: a €5,000.00 invoice due on 15 June 2026

A company issues an invoice with a taxable amount of €4,166.67 and 20% VAT of €833.33, €5,000.00 payable in total, due on 15 June 2026. The client pays on 30 September 2026. Default starts on 16 June, and the period crosses 1 July, so interest is calculated in two parts:

The daily interest is €1.41 up to 30 June and €1.44 from 1 July. Without the payment date the delay is 106 days and the interest €152.59. Dividing by 365 gives €151.93, less than what is owed. In a commercial transaction at least €40.00 compensation for recovery costs is added (Art. 309a, para. 1 of the Commerce Act). On 30 September 2026 the client therefore owes €5,194.04: €5,000.00 principal, €154.04 interest and €40.00 compensation.

If the client transfers only €5,000.00, the payment covers costs and interest first and only then the principal (Art. 76, para. 2 of the Obligations and Contracts Act). The unpaid part of the principal keeps bearing interest.

Payment terms in Bulgaria: 60, 30 or 14 days

Between businesses the payment term for an invoice may be up to 60 days, and longer only by exception, when the nature of the goods or services or another important reason requires it, if it is not grossly unfair to the creditor and not contrary to good morals (Art. 303a, para. 1 of the Commerce Act). The same rules apply to transactions of craftsmen, people providing services through personal labour and people in a liberal profession (Art. 303a, para. 6). Statutory late payment interest runs from the day after the term ends.

A term counted in days excludes the day it starts from and ends at the end of its last day; if the last day is a non-working day, the term ends on the next working day (Art. 72, paras. 1 and 2 of the Obligations and Contracts Act). For example, in a commercial transaction with no agreed term, an invoice received on Friday, 2 October 2026, is payable by Friday, 16 October 2026, and interest runs from 17 October.

When the 14 days run from receipt of the invoice, you need to be able to prove the date of receipt. If it cannot be established, or the invoice arrived before the goods or services, the term runs from the day after the goods or services were received (Art. 303a, para. 3, sentence two of the Commerce Act). The due date is not a mandatory invoice requirement, but when it is written on the invoice and in the contract, the day of default is clear.

Do you need a payment demand before interest starts

No payment demand is needed when the due date is fixed: the debtor is in default once it passes (Art. 84, para. 1 of the Obligations and Contracts Act). In a commercial transaction, the interest and the €40 compensation are owed expressly "without a demand being necessary" (Art. 309a, para. 1 of the Commerce Act). A demand is needed when no payment date is set and the transaction is not commercial: default then starts after the demand (Art. 84, para. 2 of the Obligations and Contracts Act).

A written payment demand is useful even when it is not required. It shows the client the exact amount and deadline and can avoid going to court.

The €40 compensation for recovery costs

In a commercial transaction, a creditor that has performed its own obligations is entitled, on top of statutory interest, to compensation for the costs of recovering the claim of at least €40, without a demand (Art. 309a, para. 1 of the Commerce Act). If the actual damage and recovery costs are higher, the creditor can claim them under the general rules (Art. 309a, para. 1, sentence two).

A contract may limit the interest and compensation only if this is not grossly unfair to the creditor and not contrary to good morals. When the debtor is a public contracting authority, such a limitation is void (Art. 309a, para. 3 of the Commerce Act).

What to do about an overdue invoice

For an overdue invoice, send a reminder first, then a written payment demand with the calculation, and finally apply to the court for an order for payment.

1. Check the due date, the delivery and receipt of the invoice: contract, handover record, emails.
2. Send a reminder soon after the due date.
3. Send a written payment demand: invoice number and date, principal, interest to a stated date with the calculation, the €40 compensation, a deadline and the bank account.
4. Ask for a written confirmation of the debt, for example a signed balance confirmation. Acknowledgment of the claim by the debtor interrupts the limitation period (Art. 116(a) of the Obligations and Contracts Act).
5. Apply for an order for payment (заповед за изпълнение) under Art. 410 of the Civil Procedure Code (ГПК) for the money claim, when the claim falls within the jurisdiction of a district court (районен съд). Traders (търговци) file the application only electronically, through the Unified e-Justice Portal (Art. 410, para. 5 of the Civil Procedure Code), and the court issues the order within three days if the application is in order (Art. 411, para. 2).
6. Watch the objection period: the debtor may object within one month of service (Art. 414, para. 2 of the Civil Procedure Code). Without an objection the order becomes final and the court issues a writ of execution (Art. 416, para. 1). If the debtor objects, you have one month from the court's notice to bring a claim (Art. 415, paras. 1 and 4).

For the same client's next orders you can agree an advance payment. How to invoice it is covered in Invoicing an advance payment.

Is VAT charged on late payment interest

No VAT is charged on late payment interest: payments of penalties and interest of a compensatory nature are not consideration for a supply (Art. 26, para. 2, sentence two of the VAT Act, ЗДДС). The duty to issue an invoice under Art. 113, para. 1 of the VAT Act applies to a supply of goods or services, and interest is not a supply. No debit note is issued either, because a debit note is for an increase in the taxable amount (Art. 115, para. 3), and interest does not increase it. When notes are issued is explained in Credit and debit notes. Agree with your accountant how to document and book the interest claim.

How long do you have to claim interest and an unpaid invoice

A claim for interest is time-barred after three years (Art. 111(c) of the Obligations and Contracts Act), and a claim under an unpaid invoice generally after the general five-year period (Art. 110). Rent and other periodic payments also have a three-year period (Art. 111(c)). The period runs from the day the claim became due (Art. 114, para. 1) and is interrupted by the debtor's acknowledgment, by bringing a claim and by enforcement action (Art. 116); after an interruption a new period starts (Art. 117, para. 1).

The court does not apply limitation of its own motion (Art. 120 of the Obligations and Contracts Act), so the debtor has to invoke it. When the principal lapses, the interest lapses with it, even if its own period has not run out (Art. 119). Interest for days older than three years is lost if the debtor invokes limitation.

Common mistakes

• 01Using the old "base rate plus 10 points" formula for days from 1 January 2026 onwards. From that date the base is the ECB rate and the margin is 8 points.
• 02Dividing by 365. The daily statutory rate is 1/360 of the annual rate (para. 2 of Decree No. 426/2014).
• 03One rate for the whole period. A delay that crosses 1 January or 1 July is calculated in parts.
• 04Interest on the taxable amount only. The client owes the full amount payable, VAT included, and interest runs on that.
• 05An invoice with VAT or a debit note for the interest. Interest is not consideration for a supply (Art. 26, para. 2 of the VAT Act) and does not increase the taxable amount.
• 06Interest on interest without an agreement. Between merchants it is owed only if agreed (Art. 294, para. 2 of the Commerce Act).
• 07Deducting a partial payment entirely from the principal. When a payment falls short, it covers costs first, then interest and then the principal (Art. 76, para. 2 of the Obligations and Contracts Act).
• 08Waiting more than three years. The claim for interest is time-barred after three years (Art. 111(c) of the Obligations and Contracts Act).

In smetni.app

In smetni.app every invoice has a due date, and the analytics dashboard shows overdue receivables. From the Pro plan up, automatic reminders in the Sales module send the client up to three emails on the days after the due date that you set, with a default schedule of 3, 7 and 14 days; the Business plan adds a weekly overdue report sent to you. Setup is described in the Reminders guide and the dashboard in Analytics.