Executive summary
On 22 December 2023, the Irish Government published SI 650 and SI 651 of 2023, two statutory instruments transposing into law the EU CESOP Directive that introduces new record-keeping and reporting requirements for Payment Service Providers (PSPs).
From 1 January 2024 PSPs need to report certain cross-border payments (where the Payer is in the EU) to the Revenue Commissioners on a quarterly basis, with the first report due by 30 April 2024.
The Irish CESOP legislation is broadly aligned to the requirements of the Directive.
Entities and payments services in scope
The Central Electronic System of Payment Information (CESOP) is a new regime that was introduced as part of Council Directive (EU) 2020/284 and Council Regulation (EU) 2020/283. Its main purpose is to detect potential fraud and control VAT liabilities. It applies to most PSPs operating in the EU, as defined by the second Payment Services Directive ((EU) 2015/2366), or PSD2. These include: Credit institutions, E-money institutions, Payment institutions and Post office giro institutions.
The reporting requirements apply to payments facilitated by PSPs offering, among others, the following Payment Services:
- Credit transfers,
- Direct debits,
- Money remittances,
- Card payments, and
- E-money
Transactions in scope
The reporting rules apply to cross-border payments where the payer is located in an EU Member State (MS), and the payee is located in another MS, in a third territory, or in a third country.
Consequently, transactions where both the payer and payee are in the same MS, or those where the payer is not located in a MS, are excluded.
In addition, transactions become reportable when more than 25 cross-border payments per quarter to a given payee are executed.
Who needs to report and where?
For in-scope, cross border payments where the quarterly threshold is met:
- If both the payer and the payee are in the EU, the payee’s PSP reports the payment.
- If the payer is in the EU and the payee is in a third territory or a third country, the payer’s PSP report the payment.
Although CESOP is EU-wide, the reports are filed at Member State level. As such, PSPs are required to file in all Member States where services are provided. Unlike VAT payment obligations, there is no “one stop shop”. This is a multi-jurisdiction reporting regime.
In Ireland, the quarterly CESOP reports will be filed with the Revenue Commissioners, on the Revenue Online Services (ROS) portal.
What data is to be reported?
Reports will be filed in XML format, broadly containing the following elements:
- Reporting PSP’s BIC/ID;
- Payee information: Name, Address, Account ID, Tax or VAT ID;
- Payee PSP’s BIC/ID;
- Payer location information;
- Transaction information: ID, date/time, amount, and currency;
- MS of payment origin;
- Identifying if the payment is a refund, and if so, its MS destination;
- Identifying if the they payer was physically present at PSP premises.
Final thoughts
CESOP is now live. Timing is the main concern. PSPs will have to operate in overdrive to apply all the requirements, especially to assess whether all the data elements needed for the quarterly reports are being captured and if so, whether they need to be consolidated from multiple IT systems.
In addition, new procedures will have to be implemented to aggregate payments by payee to test the threshold every quarter.
Last, for PSPs operating in multiple countries, whereas the rules are similar across EU Member States, there will be minor differences, especially in the report format and its schema.
How can Grant Thornton help?
Grant Thornton will be hosting a webinar in the coming weeks, which will provide detailed approach to PSP compliance and reporting in Ireland. We are also ready to assist you in implementing effective processes to ensure that you fully satisfy your record-keeping and reporting requirements.
Learn more about how our Financial Services Tax solutions can help you
