CESOP - EU cross-border payments reporting

Overview

From January 2024, Payment Service Providers (PSPs) are required to submit data on cross-border payments received by businesses from customers. PSPs submit this data to the tax administrations in each European Union (EU) Member State in which they provide services.

This cross-border reporting requirement is part of a larger EU e-commerce Value-Added Tax (VAT) package designed to modernise current cross-border VAT procedures. The most important elements introduced to date include the VAT One-Stop-Shop (OSS) and VAT Import One-Stop-Shop.

These measures make it easier for businesses to meet their VAT obligations. They also help tax administrations to support compliant businesses by identifying VAT non-compliant businesses and VAT underpaid on cross-border transactions.

Central Electronic System of Payment Information (CESOP) database

All tax administrations send the data to a centralised European Union database, the Central Electronic System of Payment Information (CESOP). This data is aggregated within CESOP and made available to designated staff within each tax administration. The data will be used to ensure that the correct amount of Value-Added Tax is being remitted in each Member State.

Legislation

There are two pieces of EU legislation underpinning the new requirements:

• Council Directive (EU) 2020/284 amending the VAT Directive (Council Directive (EU) 2006/112/EC on the common system for value-added tax)
• and
• Council Regulation (EU) 2020/283 amending Council Regulation (EU) 904/2010 on administrative cooperation and combatting fraud in the field of VAT.

The EU legislation has been transposed into Irish law under two sets of regulations which were signed into law on 20 December 2023. These regulations come into effect on 1 January 2024.

• S.I. No. 650 of 2023 gives effect to the provisions of Council Directive (EU) 2020/284 amending the VAT Directive (Council Directive (EU) 2006/112/EC on the common system for value-added tax). The statutory instrument amends Irish VAT law by inserting Part 9A ‘Reporting obligations on certain payment service providers’ (comprising sections, 85A to 85F) into the Value-Added Tax Consolidation Act 2010 (No.31 of 2010) (VATCA)
• and
• S.I. No. 651 of 2023 gives effect to the provisions of Council Regulation (EU) 2020/283 amending Council Regulation (EU) 904/2010 on administrative cooperation and combatting fraud in the field of VAT. The statutory instrument amends Irish VAT law by inserting sections 85G and 85H into Part 9A of VATCA.

Part 9A of VATCA is entitled ‘Reporting obligations of certain payment service providers’. It was inserted by S.I. No. 650 of 2023 and expanded by S.I. No. 651 of 2023.

Next: Payment Service Providers (PSPs) that need to report