A new Council Directive will, with effect from 1 January 2024, require Payment Service Providers (PSPs) to collect and report data regarding cross-border payments. This measure is being introduced as part of an EU-wide regime to detect and combat VAT fraud arising from cross-border e-commerce transactions.
A new central electronic system of payment information (CESOP) will be set up for reporting and storing the payment information and for further processing of this information by national anti-fraud officials. This data will be made available under strict conditions, including data protection aspects, to the local tax authorities.
Which PSPs and transactions will fall within the scope of the new reporting rules?
The new reporting obligations are only applicable in respect of cross-border payments. A payment is considered cross-border when it is made by a payer located in an EU Member State (and irrespective of whether in the capacity as a business or otherwise) to a payee located in another jurisdiction (irrespective of whether this is within or outside the EU).
The definition of PSPs is consistent with the definition as set out in the Payment Services Directives (PSD) and includes credit institutions, payment institutions, electronic money institutions, and post office giro institutions. Small PSPs with a turnover of less than €3 million and, in specific cases, commercial agents and electronic communication networks or services, who might qualify for less complex reporting under PSD, also fall within the scope of the new rules.
The requirement to collect and report the prescribed information is triggered when more than 25 cross-border payments are processed to the same payee in a calendar quarter. This information will need to be reported on a quarterly basis to the Member State where the PSP has its registered office or its head office, as well as any Member States where it has a branch or an agent.
The location of the PSPs for both the payee and the payer need to be considered to determine which PSP has the reporting obligation. If both the PSP of the payee and of the payer are located in the EU, it is the PSP of the payee that is subject to the reporting requirement. In the event that the PSP of the payee is not located in the EU, the obligation to report falls on the PSP of the payer.
PSPs will be required to retain supporting records for a period of three calendar years.
What information should be collected?
In terms of the new rules, the records to be kept by the PSPs should include the following information:
a. The BIC or any other business identifier code that unambiguously identifies the PSP;
b. The name or business name of the payee, as it appears in the records of the PSP;
c. If available, any VAT identification number or other national tax number of the payee;
d. The IBAN or, if the IBAN is not available, any other identifier which unambiguously identifies, and gives the location of, the payee;
e. The BIC or any other business identifier code that unambiguously identifies, and gives the location of, the PSP acting on behalf of the payee where the payee receives funds without having any payment account;
f. If available, the address of the payee as it appears in the records of the PSP;
g. The details of any cross-border payment;
h. The details of any payment refunds identified as relating to the cross-border payments.
The information referred to in (g) and (h) above should furthermore contain the following details:
The date and time of the payment or of the payment refund
The amount and the currency of the payment or of the payment refund;
The Member State of origin of the payment received by or on behalf of the payee, the Member State of destination of the refund, as appropriate, and the information used to determine the origin or the destination of the payment or of the payment refund in accordance with Article 243c;
Any reference which unambiguously identifies the payment;
Where applicable, information that the payment is initiated at the physical premises of the merchant.
PSPs are required to submit the data mentioned above by no later than by the end of the month following the calendar quarter to which the information relates. The data will be reported by means of an electronic standard form.
If you think that these new reporting obligations will be relevant to you, we will be happy to assist with any queries and discuss what implications this may have on your business.
PSP Reporting Directive
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