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EU Payment service providers’ seller 2024 VAT reporting – regulation adopted

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.

Reported information:

  • Date and time of payment
  • Amount and currency
  • EU member state of payment origin and destination
  • Any reference numbers

Bookkeeping information

  • 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

Reform (click for details) Update
2025 VAT registration thresholds equivalence foreign businesses On track
Virtual events VAT rule changes Agreed
2024 Payment providers' seller transaction reporting and bookkeeping obligations On track
Digital Reporting Requirements (DRR), e-invoicing and live transaction reporting Implementation of VAT in the Digital Age?
2023 DAC 7 - marketplace reporting obligations on sellers' activities On track
Financial Services VAT exemption reform proposals Consultation complete; proposal 2023
Tour operator margin scheme VAT reforms EC undertaking fresh review
2022 EU definitive VAT system Member states not agreed on format
EU reduced VAT rate freedoms Enter into force 6 April 2022
IOSS reforms to prevent double taxation Proposals early 2022
VAT in the Digital Age proposals On track for Q3 2022 detailed proposal
Single EU VAT registration - extension of OSS for B2B and B2C On track for Q3 2022 detailed proposal
Proposal for VAT treatment of the platform economy On track for Q3 2022 detailed proposal
VAT Gap Initiative Q3 2022
2021 One-Stop-Shop (OSS) single EU VAT return In effect
Ending €22 import VAT exemption; new IOSS return In effect
Marketplace deemed supplier EU VAT reforms In effect
2020 EU four Quick Fixes for VAT In effect
Tax authorities anti-VAT fraud cooperation In effect
Tax Action Plan - 25 VAT and other tax reforms roadmap See 'VAT in the Digital Age' and others
2019 Simplification of e-services VAT compliance and thresholds In effect
Single and multi-use vouchers In effect
2018 Lower e-book and publications VAT rates In effect, although not all EU states have adopted the option
EU Generalised Domestic Reverse Charge VAT Mechanism In effect, although no country has adopted this voluntary option
2015 B2C electronic services VAT reforms - MOSS return In effect

 

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