CESOP stands for Central Electronic System of Payment information. It is an EU system used to collect, store, and analyze certain cross-border payment data reported by payment service providers.
CESOP was introduced to help EU Member States detect VAT fraud in cross-border e-commerce. Since 1 January 2024, payment service providers offering payment services in the EU have had to monitor payees of cross-border payments and report certain payment data to tax authorities.
In simple terms, CESOP is an EU payment reporting system for cross-border transaction data.
CESOP reporting applies to payment service providers that process relevant cross-border payments in the EU. PSPs must keep records of certain cross-border payments and report information to the tax administration of the relevant EU Member State. The national tax authority then transmits the data to CESOP, where it can be centralized, stored, aggregated, and cross-checked with other EU data sources.
The reporting is designed to help tax authorities identify payees that receive significant cross-border payment volumes and may have VAT obligations in the EU.
CESOP reporting may include information about the payee, the payment service provider, and the relevant cross-border payment transactions. This can include data such as payee identifiers, payment account details, transaction dates, transaction amounts, currencies, Member States involved, and other payment information required by the reporting rules.
The purpose is to give tax authorities structured payment data that can help detect possible VAT fraud in cross-border e-commerce.
CESOP reporting can apply to payment service providers offering payment services in the EU, including banks, electronic money institutions, payment institutions, and other regulated PSPs. The obligation is focused on cross-border payments and the payees receiving them. In general, PSPs must monitor payees and report information when a payee receives more than 25 cross-border payments in a quarter.
The exact reporting responsibility can depend on the PSP's role in the payment flow, the location of the payer and payee, and the local implementation in the relevant Member State.
For payment businesses, CESOP is connected to transaction data quality, payee identification, reporting workflows, data storage, reconciliation, and compliance operations.
