Banking & Fintech /

CESOP – New Obligations for Payment Service Providers

From January 1, 2024, payment service providers in the EU are required to keep records and report cross-border transactions to the Central Electronic System on Payment Information (CESOP). The aim of this regulation is to combat VAT fraud in the e-commerce industry.

Who is Covered by CESOP?

CESOP applies to the following payment service providers:

  • Banks
  • Credit institutions
  • Electronic money institutions
  • Payment institutions
  • Post office giro institutions

What is the New Obligation About?

Under the newly introduced legislative package, payment service providers in the European Union must keep records of the payments they process and the payees of those payments for each calendar quarter.

Records must be kept in electronic form for 3 years after the end of the tax year in which the payment was recorded.

The record-keeping requirement applies exclusively to cross-border payments. Providers must share these records with national authorities when specific conditions are met.

Records must be kept in electronic form for 3 years after the end of the tax year in which the payment was recorded.

What Information Should the Records Contain?

  • BIC or any other company identification code
  • Name and surname or name of the payee
  • VAT identification number or any other tax identification number
  • IBAN or any other number that uniquely identifies the payee and its location
  • The address of the payee, if available
  • Date and time the payment was made or returned
  • The amount and currency of the payment or refund
  • Country of origin of the payment or refund

Reporting Obligation

Two types of entities are required to report the records:

  • Payment service providers of the payee – when the payee is located in a Member State.
  • Payment service providers of the payer – where none of the payee’s payment service providers are located in a Member State.

Reporting Obligation

CESOP: How New Regulations Will Impact the Payment Market

CESOP aims to increase transparency and efficiency in the fight against tax fraud and money laundering through enhanced monitoring and reporting of payment transactions within the European Union.

Want to know more about the latest fintech regulations? Check out our blog and stay updated with the latest changes!

Author team leader DKP Legal Mateusz Bałuta
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check full info of team member: Mateusz Bałuta
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