European tax reporting solution for smooth CESOP compliance

The reporting obligation came into effect on 1 January 2024, with the reported data subsequently being shared through the CESOP system to support VAT fraud investigations across the European Union.

Where the regulatory conditions and reporting thresholds are met, PSPs are required to collect and report information on qualifying cross-border payments to the relevant National Tax Administration (NTA) on a quarterly basis, in accordance with CESOP requirements.

The reporting obligation is triggered when more than 25 cross-border payments are made to the same payee within a calendar quarter. In such cases, PSPs must submit the relevant payment data to the relevant National Tax Administration (NTA) every quarter, in accordance with the European Commission's CESOP reporting specifications.

• Q1 (January to March) reports are due by 30 April,
• Q2 (April to June) reports are due by 31 July,
• Q3 (July to September) reports are due by 31 October,
• Q4 (October to December) reports are due by 31 January of the following year.

Following submission, NTAs forward the reported data to the central CESOP system managed by the European Commission, enabling tax authorities across the EU to support VAT fraud detection and investigation efforts.

The CESOP reporting process consists of three main stages:

1. The PSP collects and submits the required cross-border payment data to the relevant National Tax Administration (NTA) on a quarterly basis.
2. The NTA validates and forwards the reported data to the central CESOP system operated by the European Commission.
3. A structured feedback file is generated and made available to the PSP, indicating whether the report has been accepted, identifying any XML validation errors, and highlighting any data corrections or resubmissions that may be required.

To accommodate different operational and technical requirements, LUXHUB's CESOP solution is available either as an on-premises deployment or as a managed service.

The platform also provides a user-friendly web interface that allows compliance teams to review, validate, and, where necessary, correct reports before submission. This helps reduce the risk of validation errors and report rejections by the National Tax Administration (NTA) or the central CESOP systems.

However, CESOP is a mandatory EU reporting requirement. Failure to submit reports, late submissions, or the provision of incomplete or inaccurate data may result in financial penalties, increased regulatory scrutiny, corrective actions, and reputational risk.

This centralized approach simplifies compliance management and helps institutions efficiently address their cross-border reporting obligations.

While standard VAT reporting focuses on the merchant's tax obligations, CESOP focuses on payment transaction data, providing tax authorities with an additional source of information to support VAT compliance and fraud detection across the European Union.

Regardless of the deployment model chosen, institutions benefit from the same core capabilities, including data validation and pre-processing, CESOP-compliant XML generation, report review and management, and feedback file processing.

Where applicable, these PSPs must comply with the same reporting requirements as EU-based PSPs, including the quarterly reporting of eligible payment data to the relevant National Tax Administration (NTA).

LUXHUB's CESOP portal includes dedicated tools to simplify feedback management. The platform automatically processes and interprets feedback files, highlights validation errors and rejected records, and helps users identify the actions needed to correct and resubmit reports when necessary.

LUXHUB offers more than a reporting solution. It provides a combination of regulatory expertise, proven technology, and dedicated support to help PSPs navigate CESOP requirements with confidence.

As a regulated and CSSF-supervised organization, LUXHUB has a proven track record in delivering European regulatory solutions, including PSD2 and Verification of Payee (VOP). This experience enables LUXHUB to understand both the regulatory requirements and the practical implementation challenges faced by PSPs.

Built by payments and compliance experts, the CESOP solution is designed to simplify reporting, improve data quality, and support institutions throughout the entire compliance lifecycle.