Introducing CESOP

15th February 2024 • News

The Malta Tax and Customs Administration (MTCA) recently organized a half-day seminar on the Central Electronic System of Payment Information (CESOP). CESOP imposes an obligation, effective 1 January 2024, on qualifying payment service providers (including banks) to record and submit information on cross-border payments originating within the EU. CESOP has been enacted as a measure within the framework of EU and local VAT legislation, since it is primarily intended to prevent and detect VAT fraud, in particular that arising from e-commerce transactions.

During the first presentation, the MTCA provided attendees with insights into the state of play of the CESOP legislation at both EU level as well as at domestic level, the latter of which is provided for by S.L.406.22 of the laws of Malta. This was followed by another presentation by MTCA which focused on the rationale and objectives of CESOP as a means of enhancing the ability of the EU Member States’ tax authorities to tackle cross-border VAT fraud.

In the second part of the seminar, representatives from MTCA as well as the Malta Information Technology Agency (MITA) – which is responsible for setting up and developing Malta’s online CESOP registration and reporting portal – demonstrated CESOP registration via a walkthrough of the online process. They also provided insight into the expected CESOP data exchange process, which shall be based on a web service via a secure network i.e. no manual uploads/submissions are expected to be allowed in Malta.

During the seminar, the MTCA took the opportunity to reiterate its recent announcement that qualifying payment service providers whose home Member State or host Member State is Malta, have been granted a one-off extension to the CESOP registration deadline, which is now 16 February 2024.

The final session of the seminar consisted of a panel discussion moderated by Mr Nico Sciberras (MTCA) which focused on the challenges of CESOP, with panellists from the MTCA and representatives of the relevant professional bodies, including Chris Borg representing the Institute of Financial Services Practitioners (IFSP).

There was consensus among the panellists that one of the major challenges of CESOP is the fact that the EU has opted not to follow a One-Stop shop model for CESOP registration and filings (contrary to the approach that has increasingly been adopted in the field of VAT). Consequently, qualifying payment service providers who provide payment services in multiple EU Member States via the exercise of passporting rights are liable to register for CESOP and make quarterly CESOP filings in all relevant EU Member States. This would entail significant administrative burdens and costs.

Follow this link for further information on CESOP from the European Commission
Refer to this page for information on registration for CESOP in Malta