New Rules for Payment Service Providers - Introduction
The German Federal Ministry of Finance (BMF) has issued detailed guidance on the new regulatory requirements for payment service providers under Section 22g of the German Value Added Tax Act (UStG). This guidance comes in response to the need to strengthen measures against VAT fraud within the European Union. The new rules, effective from 1 January 2024, emphasize the importance of maintaining records, reporting, and retaining information on cross-border payments.Overview of the New Regulations
Under the revised Section 22g UStG, payment service providers operating in Germany must keep detailed records of cross-border payments processed, provided they execute more than 25 transactions per quarter to the same payee. These records are then transmitted to the Federal Central Tax Office (BZSt) and subsequently fed into the Central Electronic System of Payment Information (CESOP), a European database designed to monitor and analyze cross-border payment data to prevent VAT fraud.Key Obligations for Payment Service Providers
The BMF outlines four specific obligations for providers under the new regulation:- Record-Keeping: Providers must diligently record details of cross-border payments.
- Notification Requirement: Providers must notify the BZSt if they process more than 25 cross-border payments to the same payee in a quarter
- Correction Obligation: Adjustments must be made for any discrepancies in previously reported data.
- Retention Obligation: Providers are required to retain records for a specified period to support potential audits or investigations.