New reporting obligation for payment service providers
Find out here about the requirements and the solution from the EFDIS portfolio for reporting and regulatory affairs.
Banks and payment service providers (PSPs) are faced with new requirements in connection with cross-border e-commerce. Supervision aims to achieve transparency regarding certain payments and their recipients, primarily with the aim of preventing tax fraud in e-commerce. The obligation to record and transmit cross-border payments by PSPs is based on a legislative package adopted by the European Council on February 18, 2020.
From January 1, 2024, payment service providers must record certain cross-border payments and transmit them to the Federal Central Tax Office (BZSt) on a quarterly basis. The national legal basis for CESOP (Central Electronic System of Payment Information) is anchored in Section 22g of the Annual Tax Act 2022 – Special Obligations for Payment Service Providers (ZDL) and has been implemented in the area of VAT. In this context, CESOP serves as a central data collection point for information on cross-border payments and also offers the possibility of a comparison with other European databases.
Against tax fraud
The main objective of this regulation is to identify the payee, the recipient of the funds and the seller responsible for the VAT of B2C online transactions. In most cases, the required information is already known to payment service providers today. If the specified criteria for cross-border payments are met, reporting-relevant information from KYC and transaction data must be collected across all systems. In concrete terms, this means Banks offering payment services in the EU must monitor payees for cross-border payments from member states and provide information to the administrations of these member states on those who receive more than 25 cross-border payments per quarter. All information stored in the CESOP will be made available to the anti-fraud experts of the member states via a network called "Eurofisc" for further analysis.
No bonus for small institutions
Scope of validity
The reporting obligation applies to payment service providers in accordance with the Payment Services Directive (PSD2) and therefore specifically to credit institutions, e-money institutions, postal banks/postal giro offices, payment institutions and other payment service providers (PSPs) that are authorized to provide payment services. The well-known exemption for small payment service providers that process less than EUR 3 million in transaction value does not apply to the CESOP reporting obligations.
For the purposes of the regulation, a payment is cross-border if funds are transferred from a payer based in an EU member state to a payee in another member state or third country via a payment service provider. This affects all types of payment transactions such as card payments, e-money transactions, money transfers and direct debits. The rules come into force on January 1, 2024 and apply to the whole of Europe. The member states of the European Economic Area, consisting of 27 EU member states plus Iceland, Liechtenstein and Norway, are obliged to transpose this EU directive into national law by then.
The most important facts at a glance
The CESOP report is an automated electronic submission in XML format, which is submitted quarterly via the connection to the BZSt "DIP" portal.
The information must be submitted to the national tax authority by the end of the month following the end of the reporting period, provided that there are at least 25 reportable transactions in a calendar quarter.
Natural and legal persons who are to be identified according to defined criteria are relevant for reporting. Different payment methods must be recorded.
Please note: There are no exceptions for "small" institutions. In addition, fines of up to 5,000 euros can be imposed for incorrect, incomplete or late reporting.
On the safe side with a competent partner
Our EFDIS.CESOP solution offering
Our CESOP platform fully supports the requirements, from data processing to the creation of reports and their transmission to the tax authorities of the member states. The CESOP Reporting Client fully meets the requirements of the tax authorities and offers you a clear and convenient suite for the smooth processing of quarterly reports. Our standard interfaces guarantee a fast and uncomplicated connection to all banking systems. We take care of data transmission to the BZSt via the "DIP" mass data interface. We offer our services in an economical SaaS model. Benefit from the advantages of lean implementation and the security of BAIT-certified operation.