Central Electronic System of Payment information (CESOP) imposes new reporting obligations on Payment Service Providers (PSPs) to fight against VAT fraud carried out by sellers established in another Member State or a non-EU country.
PSPs must transmit information on cross-border payments originating from Member States and on the beneficiary (“the payee”) of these cross-border payments.
The objective of this measure is to detect possible e-commerce VAT fraud carried out by sellers established in another Member State or in a non-EU country.
The transmission of data must start in the first quarter of 2024.
Payment Service Providers (PSPs):
PSPs will need to report on a quarterly basis the relevant cross-border payments to their local tax authority. All cross-borders payments coming from a PSP located in the EU are to be considered. The reporting obligation will fall under the Payer's or Payee’s depending on the scenario.
Local specificities are seen in some Member States and foreseen in others, similar to what we have seen in other tax regulations (e.g. DAC2(CRS) and DAC6).
|Payer PSP location||Payee PSP location||Reporting obligation|
|In the EU||In the EU||Payee PSP|
|In the EU||Not in the EU||Payer PSP|
|Not in the EU||N/A||No reporting|
PSPs will face new challenges in analysing significant cross-border transaction flows and reporting relevant information on a quarterly basis in formats predefined by the authorities.
Regulatory technology and software provider will help you to overcome the new challenges with automated data flows and rules analysis, management of large data volume, and production of reports in the expected formats.