What is legal interest?
Verified 28 June 2024 - Directorate for Legal and Administrative Information (Prime Minister)
The legal interest is a sum of money that the debtor shall creditor in case of late payment. Its rate changes every six months :
The creditor is an individual who is not acting for professional purposes | Other cases (including creditor is a professional) | ||
|---|---|---|---|
2024 | 2e semester | 4.92% | 8.16% |
1er semester | 8.01% | 5.07% | |
2023 | 2e semester | 6.82% | 4.22% |
1er semester | 4.47% | 2.06% | |
2022 | 2e semester | 3.15% | 0.77% |
1er semester | 3.13% | 0.76% | |
2021 | 2e semester | 3.12% | 0.76% |
1er semester | 3.14% | 0.79% | |
2020 | 2e semester | 3.11% | 0.84% |
1er semester | 3.15% | 0.87% | |
2019 | 2e semester | 3.26% | 0.87% |
1er semester | 3.40% | 0.86% | |
2018 | 2e semester | 3.60% | 0.88% |
1er semester | 3.73% | 0.89% | |
2017 | 2e semester | 3.94% | 0.90% |
1er semester | 4.16% | 0.90% | |
2016 | 2e semester | 4.35% | 0.93% |
1er semester | 4.54% | 1.01% | |
2015 | 2e semester | 4.29% | 0.99% |
1er semester | 4.06% | 0.93% | |
The statutory interest rate is used to calculate the following:
- Interest on sums payable in the event of late payment ordered by a court decision
- Interest on a loan, if the contract does not provide for overall effective rate (TEG) of this loan
Warning
Legal interest should not be confused with the contractual interest nor with the indexing clause, which are distinct from the legal interest.
Interest due by the debtor shall be called simple interests where they are calculated solely on capital. This is the case when the amounts have been due for less than a year.
Example :
Judgment on 25 June 2020, served on 1er September 2020 and becoming applicable that same day.
Decision: Order to pay €2,000
Legal interest rate on 2d 2020 semester: 3.11% (creditor is an individual)
If the convicted person commits to pay on September 30, 2020, you get:
(2,000 x 30 x 3.11%) / 365 = €5.11
2,000 + 5.11 = €2,005.11
Total to be paid is €2,005.11.
Remember: even if 2020 is a leap year, 365 should be used in the calculation.
Where the amount due is not paid within 2 months of the date of application of the judgment, simple statutory interest shall be paid over the period of the first 2 months. And increased interest are to be paid after these two months.
FYI
Since 2015, the premium rate has been the statutory simple interest rate, increased by 5 percentage points.
Example :
Date of judgment: 1er September 2019, served on 17 September 2019 and becoming applicable that same day.
Decision: Order to pay €2,000
The period for the payment of the simple statutory interest (first 2 months of delay) ends on 17 November 2019. The increased legal interest is due from 18 November 2019.
The sentenced person commits to pay on April 10, 2020.
Simple statutory interest rate of 2d 2019 semester: 3.26% (creditor is an individual)
Statutory interest rate plus 2d 2019 semester: 8.26%
Statutory interest rate plus 1er 2020 semester: 8.15%
The amount of the statutory interest payable for each period must be calculated and added together as follows:
- Simple legal interest amount from September 17 to November 17, 2019:
(€2,000 x 62 x 3.26%) / 365 = €11.08 - Amount of legal interest increased from 18 November to 31 December 2019:
(€2,000 x 44 x 8.26%) / 365 = €19.91 - 2020 statutory interest plus:
(€2,000 x 100 x 8.15%) / 365 = €44.66
The total amount of the statutory interest is: €11.08 + €19.91 + €44.66 = €75.65
The total to be paid is: €2,000 + €75.65 = €2,075.65
Remember: even if 2020 is a leap year, 365 must be used in the calculation.
The interest due is capitalized (we speak compound interest) where they add to the initial capital to generate interest themselves. This capitalization may be provided for in the contract or decided by the judge. They may only be used for a claim exceeding 1 year.
Example :
Using the example above, the amount of the legal interest of the must be calculated for the year 2019 and then included in the capital for the calculation of the year 2020. The calculation to be made is as follows:
- Amount of the simple and increased statutory interest of for the year 2019
€11.08 + €19.91 = €30.99 - In 2020, the amount due becomes:
€2,000 + €30.99 = €2,030.99 - Amount of the statutory interest plus the for 2020:
(€2,030.99 x 100 x 8.15%) / 365 = €45.35
The debtor shall repay: €2,030.99 + €45.35 = €2,076.34
Remember: even if 2020 is a leap year, 365 must be used in the calculation.
Legal interest rate plus statutory interest rate
Calculation method
Judgment and legal interest: Articles 1231-6 and 1231-7
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Ministry of Education
Banque de France