In 2024, the Netherlands introduced laws governing the collection industry for the first time. The Debt Collection Costs Act (Wet Incassokosten, or WIK) stipulates how much a business can charge in collection costs when a customer pays an invoice late. It sets a fixed percentage scale for consumer debts. As a Dutch business owner, you need to understand when the law applies and what steps to follow before you can charge a late fee.

Below, we’ll discuss the Debt Collection Costs Act, including when it applies, how the fee scale works, and how to calculate late fees using the scale. We’ll also go over common mistakes that can get Dutch businesses into disputes over unpaid invoices.

Key takeaways

• WIK sets a tiered percentage scale for collection fees levied on consumer debtors.

• Businesses have to send individuals a 14-day warning letter before they can charge a collection fee on a debt.

• Damages are not subject to value-added tax (VAT).

What is the Debt Collection Costs Act (WIK)?

The Netherlands’ Debt Collection Costs Act, or WIK, lays out the percentage-based scale that businesses must use if they choose to collect late fees on unpaid consumer invoices.

When does WIK apply?

WIK governs late fee collection procedures for individuals, not businesses (i.e., for B2C invoices, not B2B). WIK applies when the first payment deadline passes without the customer paying their bill. To comply with WIK, businesses need to send out a detailed warning letter before levying any late fees.

What are the rules for debt collections?

Once a payment is late and you’ve sent the first notice—which is required when invoicing individuals—you have to send the debtor a formal letter and give them 14 calendar days to review it, plus another two days for sending and receiving the letter. The letter needs to state the exact collection fee you’ll charge if they miss the deadline.

If the debtor fails to pay within 16 days, you can collect statutory interest in addition to the principal sum. In the Netherlands, businesses can either charge statutory interest for noncommercial transactions, which applies to consumer debt, or statutory commercial interest, a higher rate for B2B debt that is tied to the rate set by the European Central Bank (ECB).

How are collection costs calculated?

The Netherlands uses a sliding scale on the principal, similar to the way income tax brackets work.

Each bracket gets its own rate:

• First €2,500: The collection fee is 15% of the principal

• €2,500–€5,000: 10% of the principal

• €5,000–€10,000: 5% of the principal

• €10,000–€200,000: 1% of the principal

• Above €200,000: 0.5% of the principal, with a fee cap of €6,775, no matter the debt amount

There’s no late fee for debts under €40.

Calculation examples

Here’s what it looks like in practice to calculate late fees using the sliding scale.

Example A

On a €3,000 invoice, the first €2,500 at 15% would come to €375, and the remaining €500 at 10% would add €50, for a total fee of €425.

(€2,500 x 0.15) + (€500 x 0.10) = €425

Example B

On a €12,000 invoice, you’d add the first €2,500 at 15%, the next €2,500 at 10%, the next €5,000 at 5%, and the remaining €2,000 at 1%, giving you a total of €895.

(€2,500 x 0.15) + (€2,500 x 0.10) + (€5,000 x 0.05) + (€2,000 x 0.01) =

(€375) + (€250) + (€250) + (€20) = €895

Are there exceptions to WIK?

Specific administrative costs—such as the time spent on a first-payment reminder before the 14-day letter goes out—can’t be reimbursed. In addition, if a case goes to litigation, court costs follow separate rules. Public debts, such as unpaid taxes or government fines, also sit outside WIK’s reach and follow another set of collection procedures.

What are some common collections mistakes?

Here are some of the debt collection mistakes businesses often make:

• Charging fees before sending the 14-day warning letter: It’s illegal for a business to charge a late fee without first sending the warning letter. Similarly, the business can’t charge a fee without waiting the mandatory 16 days after sending the letter.

• Not getting proof of receipt for the letter: If the letter wasn’t received, a business can’t collect a late fee, regardless of how overdue the payment is. It’s therefore advisable that businesses send warning letters by registered mail and get proof of delivery. Generally, proof of email is also considered acceptable.

• Overcharging: Some businesses might apply a flat percentage, such as 15%, across the entire debt, instead of using the tiered structure. On anything above €2,500, that would be an overcharge.

• Adding value-added tax (VAT) to the collection fee: VAT, or BTW in the Netherlands, can’t be levied on collection costs, only on goods or services.

• Sending unclear or generic reminders: A reminder that doesn’t follow WIK’s requirements (e.g., stating the exact amount the debtor will be charged) can prevent a business from recovering future collection fees.

How can businesses comply with the Dutch collections law?

Include payment terms in your contracts or terms and conditions so customers understand up front when late fees occur. Make sure to include the exact late fee that will be due in your 14-day warning letter.

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FAQs about the Dutch Debt Collection Costs Act