The European Commission adopted an implementing Regulation on April 6, 2022, which provides essential details for payment service providers (PSPs) on how to report payment data in a harmonized format.
Starting from January 1, 2024, payment service providers, established in the EU, will be required to keep electronic records of payment data for cross-border payments and report this information to local tax authorities. The local tax authorities will then exchange the data with a central EU database called the Central Electronic System of Payment Information (CESOP).
Payment service providers include credit institutions, payment institutions, electronic money institutions, and post office giro institutions.
The PSPs offering payment services in the EU will have to monitor the payees of cross-border payments and transmit information on those who receive more than 25 cross-border payments per quarter to the administrations of the Member States.
The obligation of PSPs to report depends on the location of the PSPs of both the payee and the payer. If the PSP of the payee is not located in the EU, the PSP of the payer is subject to the reporting requirement, and if both the PSPs of the payee and the payer are located in the EU, the payee’s PSP is subject to the reporting requirement.
PSPs will need to report the information quarterly to the Member State where their office is registered or its Head Office, as well as any Member State where it has a branch or an agent.
The PSP Directive has been introduced to detect and combat VAT fraud within the framework of the digital economy, considering the difficulties in taxing cross-border e-commerce transactions in the digital era.
