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The EU has introduced, under EU Council Directive 2020/284 (“CESOP Directive”), a new requirement for payment service providers to submit details of cross-border payments to a new platform: CESOP.
This will require EU-based Payment Service Providers (PSPs) – as well as PSPs bases in the European Economic Area who passport their payments licence into the EU – to identify cross border payments processed and, where more than 25 payments are processed to the same payee in a calendar quarter, submit details of those payments to the local tax authorities. Subsequently the local tax authorities will provide the data - without adjustments - to the European CESOP platform.
This will provide local tax authorities with an additional tool with which to combat VAT fraud and non-compliance, identifying payments that may relate to commercial activities and, if so, whether the recipient of funds is compliant with local tax obligations.
PwC has global experience assisting clients in implementing similar reporting requirements, including QI, FATCA/ CRS, and DAC7. As such, we are well placed to assist our clients in understanding the requirements of the Directive, reviewing and quality assuring the data to be submitted, and establishing governance and monitoring procedures to ensure full compliance.
We have also developed a suite of end-to-end reporting solutions capable of submitting reports to all EU-27 Member States. Our suite of solutions can be deployed flexibly to suit client needs, whether hosted on-site, SaaS, or as a managed service.
To learn more about what PwC can do for your organisation, please contact us!
The reporting requirement applies to PSPs providing payment services – specifically items 3 to 6 of PSD2.
The requirements only concern cross-border payments, so you do not need to report on payments made between a payer and a payee in the same Member State.
Where more than 25 cross-border payments are processed to the same payee per Member State per quarter, details of those 25 payments and any others processed beyond this threshold are reportable to CESOP.
Reporting should take place where the payment services are provided: this may be in the “Home” Member State (that typically being the Member State in which the PSP has its own head office and obtained regulatory approval to provide payment services), or the “Host” Member State, that being any Member State other than the Home Member State.
The Host Member State is often where the PSP has passported its payment licence. The PSP may have no physical presence or other, existing registrations in the Host Member State. Therefore, if you provide payment services in several EU Member States, you will likely be required to submit reports in multiple territories.
Note however that the tax authorities in each Member State will have their own system and platform to which PSPs must submit data. The upload requirements and excel schemas are not necessarily the same across the EU-27.
Where both the payer (i.e. the sender of funds) and the payee (the recipient of funds) are located in the EU, the requirement to report to the local tax authorities is with the PSP of the payee.
Only where the payee is located outside of the EU will the reporting requirement fall to the PSP of the payer.
Note that certain PSPs, such as marketplaces and e-money providers, will act as the PSP for both the payer and the payee.
PSPs located in EEA Member States (Iceland, Liechtenstein, Norway) are able to passport their payment licences to the EU. As a result, they are also potentially in scope of CESOP reporting where they provide payment services to clients in EU Member States.
While these PSPs will not have to report to their Home Member State (i.e. in Iceland, Liechtenstein and Norway), they may have to submit reports to the EU Member States in which they passport their services.
Reporting will take place quarterly as follows: