In the ongoing battle against VAT fraud, a legislative package adopted on 18 February 2020 is poised to modernise fraud prevention through the transmission and exchange of payment data.
At the heart of this initiative is the Central Electronic System of Payment information (CESOP), a pivotal tool set to transform the landscape of cross-border payments.
Legislative Package Highlights:
Within this legislative package, payment service providers are now mandated to transmit essential information on cross-border payments, specifically on the beneficiaries (“the payees”) of these transactions. Notably, payees receiving more than 25 cross-border payments per quarter will be closely monitored. The cornerstone of this strategy is the establishment of the CESOP, a European database designed to centralize, store, aggregate, and cross-check payment data, accessible to anti-fraud experts via the Eurofisc network.
Objectives and Impact:
The primary objective of this legislative measure is to equip tax authorities with effective instruments to detect potential e-commerce VAT fraud perpetrated by sellers operating in other Member States or non-EU countries. By leveraging CESOP, tax authorities gain unprecedented insights into cross-border payment activities, fortifying their ability to combat fraud and maintain the integrity of the digital economy. If you are a North American Business selling B2C make sure to act now, by ensuring that you are compliant with EU VAT regulations.
Data Protection and Compliance:
Crucially, the initiative prioritizes data protection rules, ensuring that only information linked to payments associated with economic activities is transmitted to tax authorities. Consumer information and payment reasons remain excluded from this transmission.
Implementation of CESOP:
CESOP came into force on 1 January 2024
In brief and Call-to-Action for North American businesses:
CESOP is the EU solution to combat B2C VAT fraud, its reporting system is designed to identify #vatfraud by #non-eusellers. CESOP implementation means that tax authorities across the EU will have improved access to data and tools for scrutinising e-commerce vendors.
If you are a North-American business selling B2C you have to act now to avoid being found un-compliant with EU VAT regulations.
Visit www.orsasaiwai.com now or call at 1-828-378-5593 to book a free 15 minutes appointment or email us at vat@orsasaiwai.com .