On 23 March 2023, Belgium has adopted a law amending the Belgian VAT Code requiring payment service providers to keep detailed records of transactions involving online merchants and pass them on to the Belgian tax authorities. This new reporting obligation for payment service providers implements EU Council Directive (EU) 2020/284 of 18 February 2020. Payment service providers that provide (i) cross-border payment services (ii) exceeding a minimum of 25 transactions for the same EU payee during a calendar quarter, must keep records of such cross-border payments and report them to the tax authorities.
Tax authorities of EU Member States will collect the information and will then transmit it to the European database "CESOP", i.e. the central electronic system of payment information.
Payment service providers should ensure that they are prepared and able to fulfil these reporting obligations when they enter into force on 1 January 2024.
Why these new reporting obligations?
In cross-border e-commerce, combating VAT fraud poses a significant challenge for tax authorities. This particularly holds true when trading online, as no goods or services pass through customs. Fraudulent businesses exploit e-commerce opportunities in order to gain unfair market advantages by evading their VAT obligations.
The payment transaction is often the most concrete and reliable point of reference for tax authorities to carry out their basic tasks of detecting fraudulent businesses and controlling VAT liabilities. For the vast majority of online purchases made by consumers in the EU, payments are executed through payment service providers, such as banks, e-money institutions or payment institutions. It is therefore important for VAT administrations that these payment service providers keep sufficiently accurate records of relevant cross-border payments, and then provide that information to the VAT authorities.
At EU level, measures were taken to provide national tax authorities with the necessary information to check that VAT was correctly declared and remitted in the field of e-commerce. These measures are laid down in Council Directive (EU) 2020/284 of 18 February 2020. Belgium has now adopted the law implementing that directive into Belgian law.
Who needs to report?
The reporting requirement applies to payment service providers within the meaning of Directive 2015/2366 (PSD2) – i.e., banks, e-money issuers and payment institutions (with a head office or a branch in Belgium) – in respect of cross-border payments where, in the course of a calendar quarter, such payment service provider provides payment services corresponding to more than 25 cross-border payments to the same payee. A payment shall be considered a cross-border payment when the payer is located in a EU Member State and the payee is located in another EU Member State, in a third territory or in a third country. Domestic payments or payments made by non-EU payers are out of scope. The threshold of 25 cross-border payments per payee is meant to exclude payments made for non-commercial (and therefore private) reasons.
All types of payment transactions (credit transfer, direct debit, standing order, card payment) are in-scope, including money remittance transactions.
What needs to be reported?
The following data must be collected, recorded and reported:
- The BIC or any other business identifier that unambiguously identifies the payment service provider
- The name or business name of the payee as it appears in the records of the payment service provider
- If available, a VAT identification number or other national tax number of the payee
- The IBAN or, if not available, any other identifier that unambiguously identifies the payee and its location
- The BIC or other business identifier that unambiguously identifies the payment service provider acting on behalf of the payee and the location of the payee's payment service provider, if the payee receives funds without having a payment account
- If available, the address of the payee as it appears in the payment service provider's records
- The details of any cross-border payments (date, time, amount, currency, the Member State of origin / destination, any references that unambiguously identify the payment and where appropriate, information showing that the payment was initiated)
- The details of any refunds identified as being related to the cross-border payments referred to in the previous indent (same information required as under the previous indent)
When is the reporting due?
The payment service providers concerned will have to submit XML files containing the payment information to the Belgian tax authorities via the portal MyMinfin no later than by the end of the month following the calendar quarter to which the information relates. They hence have one month after the end of each reporting period (calendar quarter) in order to meet this reporting obligation.
Since the new reporting rules will enter into force as from 1 January 2024, the first reporting will be due by April 30, 2024.
Upon receipt of the information, the Belgian tax authorities will transmit it to the European database "CESOP", i.e. the central electronic system of payment information. CESOP will store, aggregate and analyze the information transmitted and make available the result of these analyses to the Eurofisc liaison officials, specialized in the fight against VAT fraud.
How long is the data retention period?
Payment service providers must keep records in relation to in-scope cross-border payments for a period of three calendar years as of the end of the calendar year of the payment date.
The new reporting rules are envisaged to enter into force as from 1 January 2024, with the first reporting due by the end of April 2024. As from then, payment service providers will need to comply with the new reporting regime. This will require a careful implementation as to assess which data need to be reported and in order to transmit those data within the filing deadline.
.Any beach of the new reporting obligations may be sanctioned with administrative fines, so timely preparation of the required tools and systems to implement these new reporting obligations is important.
If you require further assistance or guidance on the matter, please reach out to Alain Huyghe, Julie Permeke, Olivier Van den broeke or Olivier Van Baelen.