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When does an invoice collection claim become time-barred in Germany?

02.11.2023
When does an invoice collection claim become time-barred in Germany?

Germany’s business practices are firmly rooted in structure and culture. An important part of this is the process by which business claims are made and protected. How long do businesses have to make these claims before they become time-barred? In this article, we will take an in-depth look at the process of retrospective invoicing in Germany and the statute of limitations for such claims.

What exactly is limitation?

Statute of limitations refers to the period of time during which legal claims can be asserted. After the expiry of this period, a debtor may refuse to fulfil a claim on the grounds that it is time-barred, even if the claim still exists in law. In Germany, the regular limitation period for many business claims is three years, according to § 195 BGB.

The significance of the start of the limitation period

The start of the limitation period is crucial in determining when exactly a claim becomes time-barred. According to section 199(1) BGB, this period begins at the end of the year in which the claim arose. This means that claims that arose during 2019 would become time-barred on 31 December 2022. It is interesting to note that the claim does not depend on when the invoice was issued, but on when the contractor’s contractual performance was rendered.

Proactive steps against the limitation of claims

A wise contractor will always act proactively to ensure that his claims do not become time-barred. It is therefore advisable to regularly check whether there are any claims that are at risk of becoming time-barred. Such a review should ideally be conducted before the end of the year to identify claims that would become time-barred this year. If contractors find that they have provided services in 2019 that have not been paid by the end of 2022, they should take appropriate action.

Are there ways to interrupt the limitation period?

Yes, there are ways to interrupt or even restart the limitation period for claims. One common method is the dunning procedure. By initiating a dunning procedure, the limitation period of a claim can be stopped, which gives the creditor more time to assert his claim. However, it is important to note that this procedure must be carried out correctly in order to be effective.

Final thoughts

The limitation of claims is an important concept in German business law that both creditors and debtors should be aware of. While creditors should be aware of the statute of limitations in order to assert their claims in a timely manner, debtors should know when they can invoke the statute of limitations in order to protect themselves from outdated claims. It is always advisable to seek timely advice to ensure that you are fully aware of both your rights and your obligations.

Reminders alone do not stop the limitation period

Regardless of whether reminders are sent verbally or in writing, they do not affect the limitation period. However, a payment by the customer after a reminder leads to an interruption of the limitation period according to § 212 BGB. From this point on, a new three-year period begins within which the claim cannot become time-barred.

Judicial dunning proceedings can stop the limitation period

A significant advantage of judicial dunning proceedings is the possibility to stop the statute of limitations by means of an application for the issuance of a dunning order pursuant to section 204 (1) no. 3 BGB. If the claims are from 2019, an order for payment should ideally be applied for before the Christmas holidays in 2022. This application must be filled out carefully and without gaps to ensure that it is submitted to the.

Debtor in good time, possibly at the beginning of 2023. It is essential that the claim is clearly defined. An order for payment that is only a partial amount from various individual claims without these being itemised will not suspend the limitation period, especially if these details are only given after the expiry of the limitation period in the subsequent court proceedings.

Simple reminders cannot stop the limitation of claims. However, payments after reminders interrupt the limitation period. The judicial dunning procedure offers the possibility to stop the limitation period by means of a dunning order. It is crucial that this order for payment is drawn up and served correctly and in time to ensure its effectiveness.

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