EU threatens Italy government over late payment practices
by Kylene Casanova
The EU commissioner sent an EU Pilot letter on 3 February, the preliminary stage of an infringement procedure, to the Italian government. They accuse the Italian government of violating the Directive on Late Payments, which requires EU member states to settle their debts with businesses within 30 days, or a maximum of 60 days under exceptional circumstances.
If the Italian government can’t prove the accusation wrong within the next five weeks, it risks a penalty of between €3 and €4 billion or “the earnings from the municipal tax on properties (IMU),” the commissioner, Antonio Tajani, said at a press conference in Rome.
According to reports by the Italian business association for SMEs, Confartigianato Imprese, and the National Builder’s Association ANCE, the Italian government ranks last in Europe for paying its B2B debts in time. These delays amount to €2.1 billion in extra costs for corporates. The average Italian enterprise must wait almost three times as long (170 days) as the average European enterprise (61 days) to receive its cash.
Late payments in Europe
In May 2013 the Swedish credit management services group Intrum Justitia's European Payment Index showed that European companies lost 350 billion euros ($450 billion) in 2012 due to late or unpaid bills, underlining fears that small businesses expected to drive economic recovery are faltering in a prolonged recession. It doesn’t seem to have improved much since then.
The Commission estimates that late payment in Italy are even worse than in Greece (159 days), Spain (155 days) and Portugal (133 days), and are nowhere near Austria (13 days). In parts of southern Italy, there are reports of businesses waiting several years to receive their money.
Italy’s corporate debt corresponds to 4% of its GDP – another European record. This makes it incredibly difficult for Italian treasurers to plan the cash flow, while the public institutions claim their money in time. The president of SME’s association, Confartigianato, Giorgio Merletti, summed up his disgust in a press release: “Bad-payers hold enterprises hostage, representing one of the main obstacles for the economic recovery.”
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