EU: Implementing regulation on VAT and e-commerce transactions; guidance for payment service providers

A regulation regarding value added tax (VAT) and how payment service providers are to report data about e-commerce transactions has been adopted.

Guidance for payment service providers

The European Commission today reported that a regulation regarding value added tax (VAT) and how payment service providers are to report data about e-commerce transactions has been adopted.

Read the implementing regulation [PDF 251 KB]

According to an EC release (6 April 2022), the regulation:

  • Provides guidance for payment service providers for reporting payment data in a harmonized format
  • Sets out the main function of the Central Electronic System of Payment (CESOP)—an EU-financed central database
  • Lists the responsibilities of the EC and EU Member States regarding the management of the system, access to the data, and security and personal data protection

CESOP will go live 1 January 2024. The EC reported that CESOP will only be accessed and operated by an “EU network of VAT fraud experts” with an aim to detect VAT fraud in e-commerce.

Background

A legislative package adopted in February 2020 aimed to collect payment data to address VAT fraud in e-commerce (estimated to be approximately €5 billion in 2015). It was expected that the creation of CESOP would allow for the collection, storage, and processing of all payment data for the benefit of EU Member States. 

 

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