CESOP is live! It’s time to register and prepare to report

New EU tax information reporting requirements launched

On 1 January 2024, the EU Cross-Border Payment Service Provider Reporting (CESOP) requirements took effect. Under this Directive, payment service providers (PSPs) must collate and submit data quarterly to tax authorities across the EU on cross-border payments received by businesses from customers.

On 20 December 2023, the Irish Government released Statutory Instruments 650 and 651 of 2023, which transposed the EU CESOP Directive into Irish law. Revenue also issued guidance advising PSPs on the registration and filing process in respect of their new CESOP reporting requirements.

Background to CESOP

CESOP applies to specific types of EU PSPs processing payments on a cross-border basis. Reporting must be completed quarterly to the tax authorities in all EU member states where the PSP provides payment processing services, with the first filing deadline being 30 April 2024. A reporting requirement arises where 25 such cross-border payments are made to the same payee in a particular quarter. See our previous insight for further details.

Registration requirements

PSPs required to register for CESOP reporting in Ireland can do so from 1 February 2024. The registration process varies depending on whether the PSP or filing entity has an existing tax registration in Ireland. There is a separate process for agents and other third-party reporting intermediaries, depending on whether they are established in the State or not. Non-resident entities should allow sufficient time for registration where further verification checks exist.

Quarterly reporting

Once registered, CESOP reporting to the Irish Revenue Commissioners is completed online through the Revenue Online Service (ROS) each quarter. Nil reporting is recommended where no transactions are reportable in a particular quarter. The guidance explains how to upload, validate, correct and resubmit CESOP files using ROS. It also provides further guidance on the rules, formats and timelines for CESOP reporting.

The following data must be submitted to file a CESOP return:

• BIC or any other unique identifier for the reporting PSP transmitting the data;
• Name of the payee;
• VAT number or national tax number of the payee, if available;
• IBAN or any other identifier for the payee;
• BIC or any other business identifier for the payee PSP;
• Address of the payee;
• Individual payment transaction details; and
• Payment refunds.

The return must be filed electronically on a quarterly basis in XML format (within the 1GB file size limit) and meta files will not be required. A pre-validation process exists to help identify any data or file issues. Files must pass the validation checks on both ROS and the EU Commission’s central CESOP database to be validly filed. The filing process guidance will be updated in Q1 2024.

Record-keeping obligations

PSPs must keep detailed records of payees and payments made in relation to the payment services provided (which fall within the scope of reporting). The records must be retained in electronic format for three calendar years from the end of the calendar year of the date of the payment.

The Revenue Commissioners must also retain a record of the information reported to them by the PSPs for five years after 31 December of the year in which the information was provided to them.

Key actions the Business can take today

1. Understand your reporting requirements

If you are within the scope of the new CESOP rules, it is time to identify the jurisdictions where you will have a reporting requirement. The requirements for reporting may vary slightly across each EU member state, and you should familiarise yourself with the differences.

2. Get registered for CESOP filings

As noted above, PSPs (and/or their tax agents) must file a return with their member state and in each member state where they provide services that are within the scope of the reporting obligation. As such, some PSPs may be required to register for CESOP in up to 27 member states. This will be cumbersome as the registration process is inconsistent across member states.

For PSPs registering for CESOP in Ireland, registration for reporting on ROS should be completed as soon after 1 February 2024 as possible to allow sufficient time to finalise the process ahead of the first filing deadline. This is particularly important if you are a non-resident PSP—in this scenario, you are advised to register at least one month before the first filing deadline owing to the additional verification checks required.

3. Review the deadlines

Take note of the upcoming reporting deadlines and plan how your team will prepare. Review the reporting deadlines in each EU member state where you will have a reporting obligation, and remember that some of the reporting deadlines will vary.

4. Assess your data on reportable transactions

Given the quantum of potentially reportable transactions and data, organisations must be confident in the accuracy and completeness of their data before reporting begins in April 2024.