CESOP (Central electronic system on payment information)

Background

CESOP (Central Electronic System of Payment information) will enter into force on January 1st, 2024 and will impose a reporting obligation for Payment Service Providers (PSPs) to report transactional data for certain cross-border payments on a quarterly basis and to keep records of cross-border transactions. Further on the legislative background, scope and requirements can be found in our recent article regarding CESOP, CESOP: An EU VAT transactional reporting obligation for payment service providers, published on April 5th 2023. We would also like to highlight that the EU Commission issued a draft CESOP FAQ document on June 23rd, 2023 which addresses some common questions the EU Commission has received from PSPs and Member States authorities. The FAQ is non-binding but can serve to provide practical information and explanations.

In this tax alert we want to provide you with the most recent Swedish update in relation to CESOP since the Swedish government issued its government bill (proposition) on May 30th, 2023. The next step is for the bill to be passed by the Swedish Parliament.

Below are some points to consider in relation to the Swedish government bill. 

Overall implementation

The proposal for implementation of the directive into Swedish law is in line with the EU directive. 

The directive does however not include an obligation for the member states to impose penalty fees for non-compliance with the directive but Sweden, as well as many other EU member states, have decided to include penalty fees in the local legislation which in turn also affects the obligation to document and maintain information. Below are the details on the penalty fees linked to CESOP and the subsequent Swedish requirement to maintain documentation. 

Penalty fees for Sweden

The Swedish government bill includes two sorts of penalty fees, a documentation fee and a reporting fee.

Documentation fee

A PSP must document the information that is needed for the PSP to fulfil its reporting obligation and for the Swedish Tax Agency to be able to control that the PSP has fulfilled its reporting obligation. The information must be documented in an electronic format. It has been further explained in the Government bill that a PSP is obliged to electronically retain data and information on all cross-border payments that the PSP has completed, regardless of whether the PSP is liable to report them or not. The data must be documented at the end of the month following the calendar quarter that the data refers to and should be retained for three years from the end of the calendar year when the payment was made.

A documentation fee shall be levied if it is clear that a PSP has not documented information in a timely or adequate manner. 

The documentation fee amounts to 0,3 % of the PSP’s turnover in the financial year immediately preceding the financial year in which the information should have been documented. The documentation fee must amount to a minimum of SEK 3,000 and a maximum of SEK 3 million. One documentation fee can be levied per calendar quarter per PSP, but a documentation fee may not be levied if a reporting fee has already been levied for the same calendar quarter.  

Reporting fee

A reporting fee shall be levied if it is clear that a PSP has not submitted the relevant information in the right time or in a correct manner. The reporting deadline is at the end of the month following the calendar quarter the information refers to, and it should be reported based on a standardized form provided by the Swedish Tax Agency.

The reporting fee amounts to 0,1 % of the PSP’s turnover in the financial year before the fiscal year when the information should have been reported. The reporting fee must amount to a minimum of SEK 1,000 and a maximum of SEK 1 million.

Up to three reporting fees can be levied per calendar quarter. One reporting fee can be levied if the relevant information has not been filed in time or in a correct manner. The second can be levied if the relevant information has not been reported within an additional 60 days from the original deadline. The third fee can in turn be levied if the reporting is not made within 120 days from the original deadline. 

There are exceptions to when a reporting fee should not be levied although the information has been provided in time but with errors. This is if the errors are of minor importance, or if the PSP has corrected the information on its own initiative.

A reporting fee shall not be charged if a documentation fee has already been charged for the same calendar quarter. 

Deloitte’s comment 

It is expected that the implementation of CESOP into Swedish law is in line with the EU directive as this is a mandatory legislative change. The different penalties (and levels thereof) that can be imposed can however result in significant economic implications and it has been argued by the referral bodies throughout the CESOP implementation time that the fees are unreasonably high (especially in relation to non-compliance in other tax related submissions with the Swedish Tax Agency). 

The fact that the penalties remain on a high level in the event of non-compliance puts a lot of pressure on PSPs to ensure that the relevant information is retained, not only information on the cross-border payments reported but also the cross-border payments that are not reported. The same applies for ensuring the correctness of the information that is reported. As such, it will be important for PSPs to set up a process in relation to CESOP where not only data related to reportable cross-border transactions are captured but where there is a clear audit trail of which transactions that have been reported, which have not and for what reason. 

We at Deloitte can assist you with any questions you have in relation to CESOP such as applicability for your business, impact assessment to analyze your needs as well as ongoing project support and implement new routines for long-term compliance. Deloitte has also developed a platform for CESOP reporting which can handle many of the challenges related to CESOP such as processing of high data volumes in a tight deadline, multiple jurisdiction reporting and providing a good overview and audit trail of the cross-border transactions reported as well as those not being reported. 

Please reach out if you need any help in relation to CESOP or if you would like for us to set up a demo of our platform, our contact details can be found below. 

Written by: 

Jens Gullfeldt
Partner | Tax & Legal
+46 70 080 27 90 | jgullfeldt@deloitte.se

Tomas Sydner
Partner | Tax & Legal
+46 70 080 21 13 | tsydner@deloitte.se

Frida Borg
Senior Manager | Tax & Legal 
+46 70 080 20 26 | frborg@deloitte.se

Josephine Lystedt
Senior Manager | Tax & Legal
+46 70 080 23 28 | jlystedtedin@deloitte.se