2024 VAT Act amendment: notification obligation for payment providers
The draft amendment to the VAT Act that should enter into force on 1 January 2024 introduces a new notification obligation for payment service providers regarding payments abroad. The obligation is based on changes to EU legislation establishing CESOP, a central electronic system of payment information which will provide information on cross-border payments received by recipients from consumers shopping online.
The draft amendment currently going through external comments imposes the obligation on payment service providers (mainly banks) to keep records of cross-border payments and their recipients and to provide these data to tax administrators. This is the result of recent simplifications in e-commerce making it possible to shop without physical presence in a brick-and-mortar store, but at the same time opening up space for fraud.
Who will be subject to the obligation?
The obligation to keep records shall apply to all providers of payment services that provide them in the Czech Republic – i.e., not necessarily only Czech entities. Payment service shall mean a payment transaction such as a transfer of money from own funds or from a credit in the form of a card payment, direct debit, or standing order, with a bottom line of money being transferred. Records shall be kept of payments received from another member state and payments to a third country. The obligation to report cross-border payments shall only be activated upon exceeding the threshold of 25 cross-border payments credited to one person during a calendar quarter.
What data will have to be recorded?
No new record-keeping obligations, i.e., the collection of new information not so far recorded by payment service providers, are being introduced. Information to be recorded includes the BIC of the payment service provider, the payment recipient’s name, tax ID number (not necessarily assigned for VAT purposes), IBAN/BIC and address, and, where applicable, other payment data (such as the date and time of payment, its amount and currency).
What will be the notification deadlines and formats?
Notifications will be submitted to the tax administrator by the end of the month following the end of the calendar quarter, even if no obligation to keep records arises (a ‘zero report’). The notification must always be given by the last day of the month even if it falls on a weekend or holiday. The submission will be electronic via a data message in a predetermined structure.