Glossary · Austria and Germany
Default interest
Default interest is interest on a monetary debt for a period in which the conditions for payment default are met. Calculation depends on the applicable law, transaction type, any effective agreement and the relevant dates.
Distinguish the concepts
Principal pays for the original performance. Default interest addresses late payment; reminder and collection costs are other possible items with separate conditions. Keep these amounts and their legal bases separate. An interest rate is annual, rather than a flat percentage added for every reminder.
Jurisdiction and scope
Germany distinguishes payment claims without consumer involvement from other monetary debts. Austria has separate rules for commercial transactions and other cases; responsibility for the delay matters for the higher UGB rate. The Austrian half-year reference cannot simply be replaced whenever the general basic rate changes between those dates.
Illustrative business example
An invoice remains unpaid across year-end. Record the actual start of default and split the period at relevant rate changes. A partial payment changes the interest base according to its proper allocation. The calculator illustrates periods; complex payment allocation needs separate assessment.
Common questions
When does interest begin?
At the relevant start of default. The invoice date alone does not establish it.
Does one rate apply throughout?
A variable statutory reference may require several rate periods. Historical days are not recalculated using a later rate.
Who receives recovered interest?
The collection agreement also matters. incaseof.law’s terms provide for assignment of interest; calculating interest and paying it to the client are different questions.
Related topics
Sources and basis
- BGB 288
- UGB 456
- ABGB 1333
- OeNB: B2B-Halbjahreswerte / half-year rates
- Bundesbank: Basiszinssatz / basic interest rate
Content reviewed on 23 September 2026. Procedural information and our contractual terms are separate foundations. The individual case remains decisive.
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