New reporting obligations for PSPs
The Council of the EU has recently adopted a set of rules on additional administrative reporting obligations for payment service providers (“PSPs”), as defined in PSD2. The aim of these reporting obligations is to combat VAT fraud in cross border e-commerce transactions. The new rules are likely to result in a significant additional administrative burden for PSPs.
What do the new reporting obligations entail?
The rules contain new record keeping requirements. In summary, EU based PSPs should keep record of information relating to certain cross-border payment transactions, such as details of the payee, the location of the payer, and the payment transaction itself. The data should be kept electronically for a period of three years, following the calendar year in which a payment transaction occurred. This information will be stored in a yet to be developed database, which will be accessible by all EU Member States. With access to the cross-border payment data gathered by PSPs, Member States will be more effective in detecting non-payment of VAT by e-commerce traders.
When will the new rules enter into force?
The new rules will enter into force on 1 January 2024. The new rules complement the VAT framework for e-commerce coming into force in January 2021.
What to do next?
We advise PSPs to timely anticipate on the new changes, by updating their record keeping policies and procedures in line with the new requirements.
If you require further information, please reach out to your trusted adviser within Loyens & Loeff.