by Dries Torreele and Emiel Vanhée
Payment service providers' new duty to report: additional e-commerce monitoring
As from 1 January 2024, banks and payment service providers will have to provide the details of cross-border payments within the EU to the tax authorities through a register.
The tax services this way aim to gain insight into the takings of sellers' active in e-commerce. This is because B2C transactions are taxed in the customer's country, and since these customers involve private individuals, monitoring the revenue flows is not always straightforward. Consolidating all of the registers within the EU will make it clear whether sufficient VAT is being paid in the right country.
E-commerce/OSS
According to VAT legislation, transactions relating to B2C e-commerce are taxed in the country where the recipient is based. This might include telecom, radio and television broadcasting services, electronic services and the e-commerce of goods.
For instance, if shoes are sold through a Belgian web shop to Dutch and French private individuals, the Belgian seller then owes Dutch and French VAT on these sales respectively.
The VAT owed in the various countries according to the rules is not declared through the periodic Belgian VAT return, but can be jointly indicated through a unique "One Stop Shop"- or 'OSS' return.
Duty to report
In order to expand monitoring options when it comes to cross-border transactions, it was decided to oblige banks and other payment service providers to report payment details to the tax authorities through a quarterly return.
A payment is 'cross-border' when the payer (the customer) is in one Member State, and the beneficiary (the supplier or service provider) is located in another Member State or outside the EU.
A beneficiary (payment recipient) only needs to be stated if more than 25 payments were received for each quarter.
Consequences
There can be no doubt that this obligation constitutes a new means of tightening control on compliance with VAT legislation when it comes to e-commerce. Specifically, this makes it even more important to ascertain whether e-commerce suppliers are abiding by the obligations correctly, to avoid any fines and interest in the event of an audit.
If you have any questions processing VAT with your e-commerce activities or on payment service providers' new duty to report, please get in touch with one of our experts at contact@vdl.be.
Dries Torreele
Certified Tax Advisor dries.torreele@vdl.be
Emiel Vanhée
Advisor Tax emiel.vanhee@vdl.be
Disclaimer
In our opinions, we rely on current legislation, interpretations and legal doctrine. This does not prevent the administration from disputing them or from changing existing interpretations.
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