What is it about?
At the end of 2018, the European Commission released two documents regarding the exchange of VAT-relevant payment data:
The European Commission’s position is that the growing importance of e-commerce facilitates VAT fraud. Therefore, it was necessary to enable a more efficient exchange of information for payment transactions.
As the majority of online purchases made by consumers are executed through payment service providers  (PSPs), the EU Commission felt that the responsibility of collecting the required information fell to PSPs.
According to the proposal, as soon as more than 25 cross-border payment transactions per quarter and payee are made, the payee’s PSPs  must collect, transmit and retain for three years certain data, including:
This information must be made available to Member States’ national authorities, who will transfer it to the future central electronic system of payment information (CESOP). The latter will then centralize the data and forward it to Eurofisc officers, who will determine any e-commerce VAT fraud.
What is the impact of these measures?
PSPs have raised several concerns about the amount of information to be collected and recorded.
Firstly, some of this information is not always recorded in current payment transactions. Therefore, PSPs will have to upgrade their systems to be able to collect and transfer the information required, leading to an additional administrative cost. This is also the case for national administrations, who will require the ability to securely transfer the massive amount of data collected to the future CESOP.
The amount of circulated and registered data raises the question of responsibility in the case of a data breach. Indeed, the volume of rough data to be collected and analyzed will be an undoubtedly burdensome task for Eurofisc officers.
Finally, there is also the question of whether there are more efficient ways of tackling e-commerce VAT fraud. For example, blockchain would allow the recording of transactions in real-time, therefore preventing VAT fraud.
In any case, these two texts were adopted during the ECOFIN of 8 November 2019 without considering these concerns. Therefore, Member States are required to transpose the Directive into their national law before 31 December 2023.
For more information on how this legislation will impact your business, do not hesitate to contact our team of VAT experts!
 In this respect, article 1 points (a) to (d) of Directive 2015/2366 lists PSPs as follows:
Credit institutions, electronic money institutions, post office giro institutions which are entitled under national law to provide payment services, payment institutions or as any natural or legal person benefiting from an exemption.
 The payee defined in article 4 point 9 of the Directive 2015/2366 refers to any natural or legal person who is the intended recipient of funds which have been subject to a payment transaction.
Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.
Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2020 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.