Council Directive (EU) 2020/284 of 18 February 2020 has introduced certain requirements for payment service providers. These new articles in the EU VAT Directive 2006/112/EC will come into effect on January 1, 2024. The directive provides definitions for key terms such as “payment service provider,” “payment service,” “payment,” “payer,” “payee,” “home Member State,” “host Member State,” “payment account,” “IBAN,” and “BIC.” These definitions are crucial for understanding the subsequent requirements outlined in the directive.
Under Article 243b of the directive, Member States are now obligated to require payment service providers to maintain detailed records of payees and payments. These records must be kept for each calendar quarter and should enable competent authorities to conduct controls on supplies of goods and services, with the aim of combating VAT fraud. It is important to note that this requirement only applies to payment services provided for cross-border payments. A payment is considered cross-border when the payer is located in one Member State and the payee is located in another Member State, a third territory, or a third country.
The requirement specified in paragraph 1 of Article 243b applies when a payment service provider provides more than 25 cross-border payments to the same payee within a calendar quarter. The calculation of the number of cross-border payments should be done per Member State and per identifier, as referred to in Article 243c(2). If the payment service provider has information that the payee has multiple identifiers, the calculation should be made per payee.
However, there are exceptions to this requirement. Payment services provided by the payment service providers of the payer do not fall under this obligation if at least one of the payment service providers of the payee is located in a Member State, as evidenced by the payment service provider’s BIC or any other business identifier code that unambiguously identifies the payment service provider and its location. Nevertheless, the payment service providers of the payer must still include these payment services in the calculation mentioned in paragraph 2 of Article 243b.
When the requirement applies, payment service providers must keep records in electronic format for a period of three calendar years from the end of the calendar year in which the payment was made. These records should be made available, in accordance with Article 24b of Regulation (EU) No 904/2010, to the home Member State of the payment service provider or to the host Member States if the payment service provider operates in Member States other than its home Member State.
In order to determine the location of the payer and the payee, Article 243c provides guidelines. The location of the payer is considered to be in the Member State corresponding to the payer’s IBAN or any other identifier that unambiguously identifies and provides the location of the payer. If such identifiers are not available, the location is determined by the BIC or any other business identifier code that unambiguously identifies and gives the location of the payment service provider acting on behalf of the payer. Similarly, the location of the payee is determined based on the payee’s IBAN or any other identifier that unambiguously identifies and provides the location of the payee. If these identifiers are not available, the location is determined by the BIC or any other business identifier code that unambiguously identifies and gives the location of the payment service provider acting on behalf of the payee.
Finally, Article 243d outlines the specific information that must be included in the records kept by payment service providers. This information includes the BIC or any other business identifier code that unambiguously identifies the payment service provider, the name or business name of the payee, any available VAT identification number or other national tax number of the payee, the IBAN or any other identifier that unambiguously identifies and provides the location of the payee, and the BIC or any other business identifier code that unambiguously identifies and gives the location of the payment service provider acting on behalf of the payee, where applicable.
These new requirements aim to enhance the control and monitoring of cross-border payments, ultimately contributing to the fight against VAT fraud. Payment service providers must ensure compliance with these obligations by maintaining detailed records and making them available to the relevant authorities. The directive provides clarity and standardization in the EU VAT Directive, promoting transparency and accountability within the payment services industry.
