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ArticlesDenisa MateiAugust 4, 20230

New obligation for online payment service providers

In recent years, e-commerce has grown at a fast pace, facilitating cross-border sales of goods and services. As well as benefiting economies, it has unfortunately also provided an environment for some businesses to avoid paying VAT. For these reasons, the Council of the European Union has taken action to curb fraudulent practices in cross-border e-commerce.

These purchases are in most cases made through payment service providers. These providers hold information such as the beneficiary of the payment, the date of the payment, the amount paid, the country of origin of the payment, etc. These details help the tax authorities to fulfil their VAT control obligation, but also to detect businesses that are engaging in fraudulent measures.

So if payment service providers kept detailed records and reported some payments, it would help combat VAT fraud. That’s why authorities at European level have placed obligations on online payment service providers. The European Directive 284/2020 will be introduced into Romanian law this year and will apply from January 2024, from the start of the new tax year. The Ministry of Finance has initiated a draft law to amend the Tax Code, which must be repealed by the Government and adopted by Parliament to take effect.

The information will be reported quarterly by online payment service providers, but only for companies that have received at least 26 payments during the period.  By online payment service providers we mean credit institutions, e-money institutions, giro postal service providers and payment institutions.

Thus, in the Tax Code, the article “Payment service providers shall be obliged to keep sufficiently detailed records of payees and parties in relation to the payment services they provide for each calendar quarter, in order to enable the competent tax authorities to carry out controls on supplies of goods and services which, in accordance with the provisions of Chapter V of this Title (of the Tax Code), are deemed to take place in Romania, with a view to achieving the objective of combating VAT fraud” will be inserted.

Denisa Matei

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