What is CESOP?
CESOP (Central Electronic System of Payment Information) is an EU system that launched on 1 January 2024 to combat tax fraud in cross-border e-commerce. It requires Payment Service Providers to report cross-border payment data to national tax authorities, helping to identify fraud and ensure proper tax collection within the EU.
What impact does CESOP have on Payment Service Providers?
CESOP increases the compliance burden on Payment Service Providers by requiring detailed reporting of cross-border payments. They will now face higher costs, enhanced data management requirements, and greater regulatory scrutiny, especially in handling international transactions.
Compliance will be crucial to avoid penalties that could potentially run into the millions of Euros per annum.
Where do I need to report?
If the payment is made between two EU countries within the EU, then you, as the Payment Service Provider of the payee, need to report to the Member State of the payment recipient (payee country). If the payment originates in the EU but is paid outside the EU to a non-EU country, then you, as the Payment Service Provider of the payer, need to report to the Member State from where the transfer originated (payer country).
As most EU payment companies have passported payment licenses across the EU with clients based in many different Member States, they will often be required to register with and report to multiple different countries.
What kind of payments are in scope?
According to CESOP, reportable payments include any of the following going from an EU-based payer, if more than twenty-five cross-border payments are made to the same payee in a calendar quarter:
- cross-border card payments
- credit transfers
- direct debits
- e-money
- e-vouchers
- e-wallet payments
- money remittance transactions
Payments from a payer not in a Member State, to a payee in a Member State are considered out of scope.
What are the reporting obligations?
The data that needs to be reported includes:
- the ID of the reporting Payment Service Provider
- payee information (name, VAT ID/ TIN, account ID, address, and Payment Service Provider BIC/ID)
- payment/refund transaction details
- date/time
- amount
- currency
- transaction ID
- country codes of the Member States
- payer location
- physical presence indication with reference
Does each EU Member State have the same requirements?
No. Each Member State provides technical specifications for communicating the required payment records, so the details involved in complying with CESOP regulations can vary across different countries, making it potentially very complex and time consuming.
Each Member State also has a different way of calculating non-compliance penalties.
What are the relevant reporting deadlines?
Every affected Payment Service Provider will need to send detailed records of payees and payments every calendar quarter to each EU country they remit to or from.
- 1st Period (January- March): 30 April
- 2nd Period (April-June): 31 July
- 3rd Period (July-September): 31 October
- 4th Period (October- December): 31 January
How can Tax Desk help?
We manage CESOP registration and CESOP reporting for some of the largest financial institutions in the world. We can manage your registrations in all countries across the EU and can submit the required data in the correct format on your behalf at the end of each quarter to help you remain compliant.
Our CESOP solution includes:
- Comprehensive Solution: The most complete and cost-effective CESOP solution enabling registration, report generation and submission in all EU member states.
- Single online platform: To manage all CESOP data and submissions across 27 countries with real time status updates, data verification and correction handling.
- Local Language: Our multilingual team of experts have deep knowledge of the local tax regimes and regularly speak to the tax authorities. We are therefore able to ensure efficient registrations and effective engagement with the relevant authorities when required.
- Comprehensive Expertise: With years of experience grounded in one of the Big Four accounting firms, we have extensive knowledge of tax compliance and regulatory frameworks across the EU. We are uniquely positioned to help PSPs navigate CESOP’s complexities.
- Tailored Solutions: We understand that each country poses its own challenges, and each business has different requirements. Our solutions are tailored to address specific national requirements, ensuring your business stays compliant no matter where you operate.
- Technology-Driven Compliance: Leveraging the latest technology, we provide streamlined, automated solutions that minimize the risk of human error and ensure timely, accurate
- Continuous Support: CESOP is just the beginning. As regulations continue to evolve, Tax Desk is committed to providing ongoing support to keep your business ahead of the curve.
We are here to ensure that your business meets its CESOP obligations with confidence and ease.
Let us handle the complexities so you can focus on growing your business and providing a great service to your clients.
Would you like to know more?
If you would like to learn more about CESOP, your potential exposure to this new EU system or how you can efficiently and cost effectively manage your CESOP compliance, please get in touch with our team at info@taxdesk.com.[/vc_column_text][uncode_share layout=”multiple” no_back=”yes” separator=”yes”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
[/vc_column_text][/vc_column][/vc_row]