On 28 April 2005, a government decree came into force prescribing a new annual rate of default interest. The rate applies when the event of default occurs after 28 April 2005 under an agreement:
- made pursuant to the Czech Civil Code
- (unless the parties agree otherwise) made pursuant to the Commercial Code
An earlier decree prescribes the default interest rate applicable to earlier events of default.
The new default interest rate is seven points above the Czech National Bank's annual repo rate. It is fixed for six months at a time at the CNB repo rate applicable on the previous 1st January or 1st July (whichever is more recent). This makes the new decree more administratively demanding than the previous one, as creditors will be obliged to monitor the actual amount of default interest twice a year.
For more information on default interest rates, please contact Jaroslav Tajbr at jaroslav.tajbr@cms-cmck.comkveta.vojtova@cms-cmck.com or Kveta Vojtova at or call +420 22109 8888.
