CESOP explained
CESOP is a new EU initiative that took effect as of 2024. The system requires payment service providers to report data on cross-border payments within the EU. CESOP was designed to help tax authorities in monitoring and analyzing transactions; the aim being to combat VAT fraud and to improve compliance with tax obligations.
Why this directive?
The CESOP Directive was introduced in response to the growing need to effectively tackle VAT fraud within the European Union. By centralizing the collection of data, tax authorities gain a better understanding of cross-border transactions. This increases transparency and helps detect suspicious activities. Ultimately, CESOP helps bring about fair competition and a properly functioning internal market by ensuring that all economic operators comply with their tax obligations.
To whom does the Directive apply?
The scope of the rules is broad. Besides applying to providers that fall under the more general definition of payment service provider, the rules may also have direct implications for other parties operating in the e-commerce market and even for financial institutions that do not process VAT-taxed transactions.
Reporting obligation
Under CESOP, payment service providers (PSPs) are required to submit detailed quarterly reports to the tax authorities. These reports must contain information about the recipients of payments, the number and value of the transactions and other relevant data. By sharing this information, tax authorities can detect suspicious patterns and take targeted measures to prevent VAT fraud. It is essential that PSPs comply with this reporting obligation if they wish to avoid penalties and sanctions.
How can Meijburg help you?
Want to know more about what CESOP means for your company? Need help with compliance? Then contact one of our specialists. They would be pleased to discuss the possibilities with you.
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What is CESOP?
CESOP is a system that the European Union introduced to monitor cross-border payments within the EU. It is aimed at combating VAT fraud by requiring payment service providers (PSPs) to report data on these transactions to the tax authorities. This helps tax authorities to better detect suspicious activities and improve compliance with tax obligations.
To whom does CESOP apply?
CESOP applies to all PSPs that facilitate cross-border payments within the EU. This includes banks, financial institutions and other entities that are involved with processing payments between EU Member States.
Can Meijburg help with submitting the reports?
At Meijburg and in the broader KPMG network there is a specialized team who can help with submitting the CESOP reports anywhere in the EU.
Can Meijburg assist in creating the required XML files?
Meijburg can assist in creating the XML files required by the EU. We have experience in converting data into the correct format accepted by the respective countries. Additionally, we collaborate with software providers who analyze the data.
