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EU VAT data-sharing by payment service providers

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The European Commission has put forward legislative proposals for quarterly information-sharing obligations on payment service providers, such as credit card companies and other payment intermediaries, as part of anti-fraud measures to support the EU VAT e-commerce directive.

This will enable identification of both EU and non-EU online sellers when they do not comply with VAT obligations. The Commission says that more than 90% of online purchases by European customers involve a payment intermediary and data held by these companies ‘can offer EU tax administrations a useful tool to control the VAT obligations on cross-border sales of goods and services’.

The measures are contained in two instruments: an amending regulation for the administrative cooperation directive; and an amending VAT directive. Both are intended to apply from January 2022.

The regulation provides for:

  • creation of a new central electronic system of payment information (CESOP), which is expected to take at least three years to set up; and
  • competent authorities to transmit to CESOP the information they collect from the payment service providers established in their own member state every quarter.

The directive introduces the new record-keeping obligation for payment service providers, which would require these records:

  • to identify the payment service provider, the payee and details of transactions and payments received by the payee, but not information about payers;
  • to be kept only when the total number of payments received by a given payee in a calendar quarter exceeds 25; and
  • to be kept for two years.

The 25-payment threshold is based on an average value of online shopping orders in the EU which would equate to approximately €10,000 in sales over a full year (matching the €10,000 threshold on intra-EU supplies introduced by the VAT e-commerce directive).

These proposals follow related proposals published on 11 December for technical measures around the one-stop-shop and obligations on online marketplaces, as part of the new e-commerce rules coming into force in January 2021.


Issue: 1426
Categories: News , Indirect taxes , VAT