Electronic payment service providers (PSPs) will face new reporting standards starting January 1, 2024. In Europe, the PSP number has grown since the fintech boom as PSPs are part of the ecosystem. These companies act as intermediaries that allow sellers to accept electronic payments, typically — instant transactions. The upcoming requirements for PSPs companies will focus on diminishing VAT loss throughout Europe.
In discussions since 2020, next year’s changes will oblige every PSP processing more than 25 transactions per quarter to report these transactions every quarter to EU countries. This information would then be used by the tax authorities to check if the reported VAT is correct and whether no VAT registrations are missed.
The information provided by PSPs will be centralized in the Central Electronic System of Payment Information (CESOP) database, which will be used to hold and review each payment.
PSPs will have to archive relevant payment details for at least three years while reporting every quarter to the tax authorities. The PSP reporting deadline will be set to the end of the month commencing the end of the reporting period. Tax authorities will move the data to the CESOP for further reviews and crosschecks. If irregularities are detected, EU member states’ anti-fraud specialists will take the process from there.
It is hoped that such a process will partially reduce the estimated yearly VAT losses of €7BN.
As of yet, the data that will have to be collected is stored is not defined. However, it is clear that the PSP would have to provide the payee and recipient’s identity information. So the new requirements will cover both the payee and the payer’s PSP.
Finland has already agreed to amend its VAT regulations to facilitate these changes. And some countries have already updated their VAT directives to add the new PSP requirements. Among them are Belgium, the Netherlands, and Luxembourg.
Are you an e-commerce business and have concerned about the changes? Consult with us, and we will ensure your operations are fully prepared for the enrolment of all law changes in EU.