PSP’s – credit card, bank and online payment providers – to supply e-commerce payment details to shared EU CESOP database
The European Commission (EC) on 6 April 2022 has adopted the implementing regulation for imposing reporting and bookkeeping requirements on payment services providers (PSP’s) for their sellers’ activities. This clarifies the processes for reporting in standardised scheme.
This regulation includes a new EU-wide database (CESPOP) to hold all payment data from January 2024. This includes management of the system, access to the data, and security and personal data protection.
February 2020 – EU Council adopts legislation
The European Union member states agreed in February 2020 to require payment service providers (PSP) processing e-commerce seller’s cross-border receipts to quarterly report transactions and follow minimum 3-year record keeping requirements. There will be a reporting threshold sellers receiving more than 25 payments per quarter via any provider will be in scope. Payments in-scope cover receipts to payee’s (the receiver of the monies) whether resident in the EU or not.
This new VAT anti-fraud measure will come into effect from 1 January 2024. Follow all the European Union’s completed and planned reforms via VAT Calc’s EU VAT reform tracker.
The aim is to verify sellers active across Europe, and to validate if they are correctly VAT registered and declaring tax in the right member state and combat an estimated €7 billion in e-commerce VAT fraud. This includes using the IOSS and OSS pan-EU returns introduced in July 2021 as part of the EU e-commerce VAT package.
PSP reporting and record-keeping requirements
The requirements are for both the payee and payer’s PSP to hold data on the transactions. But if both of the PSP’s are resident in the EU, then only the payee PSP falls under the requirements. This though may become complex as most transactions involve several transfers and consolidator PSP’s.
PSP’s are obliged to hold the relevant information for at least three years. Reporting of transactions is on a quarterly basis. Submissions are due by the end of the month following the reporting quarter. Tax authorities must then forward the data to the new central database, CESOP – see below.
New CESOP database to share payment providers’ reported transactions
The EU is creating a new database, Central Electronic System of Payment information (CESOP). This information will be centralised where it will be stored, aggregated and cross-checked with other European databases. All information in CESOP will then be made available to anti-fraud experts of Member States via Eurofisc.
Information to be reported and stored
In theory, most of the information being required of the payment service providers is already available. It will mostly be to identify the payee, the recipient of the funds and the seller in any online B2C transaction responsible for the VAT. Although the European Commission has not yet defined the data, but has confirmed that it should be an automated electronic filing.
- Date and time of payment
- Amount and currency
- EU member state of payment origin and destination
- Any reference numbers
- BIC number of PSP
- Name and business details of payee
- VAT number of similar of payee
- IBAN of payee
- Address of payee
- Details of any cross-border payment
Who are Payment Service Providers
The Payment Services Providers (PSP’s) are EU resident and defined in the Payment Services Directive (PSD 2) as:
(a) credit institutions (banks; credit cards)
(b) electronic money institutions (online payment processors; e-wallets)
(c) post office giro institutions which are entitled under national law to provide payment services;
(d) payment institutions;
EU VAT reforms