Supporting PSPs in their compliance journey

CESOP stands for Central Electronic System of Payment information. It is a European Union framework aimed at detecting and preventing VAT fraud in the context of cross-border transactions. Introduced by EU Council Directive 2020/284 and amending the VAT Directive, CESOP requires payment service providers (PSPs) operating in the EU to report data on cross-border payment transactions to their National Tax Administration (NTA) on a quarterly basis, beginning 1 January 2024. 

CESOP applies to all payment service providers (PSPs) operating within the EU that process cross-border payment transactions. This specifically includes credit institutions, Electronic Money Institutions (EMIs), payment institutions, and post office giro institutions. Any PSP providing services in multiple EU member states must submit reports to each relevant National Tax Administration (NTA), not just the NTA of their home country. 

PSPs must report cross-border payment transactions where the payer is located in one EU member state and the payee (beneficiary) is located in another member state or outside the EU. Reporting is triggered when a PSP processes more than 25 payments to the same payee within a calendar quarter. The report must be submitted quarterly to the relevant NTA in an XML format specified by the European Commission’s CESOP guidelines. 

CESOP reporting obligations came into effect on 1 January 2024. PSPs must submit quarterly reports to their NTA within one month after the end of each calendar quarter: meaning Q1 data (January–March) is due by 30 April, Q2 data by 31 July, Q3 data by 31 October, and Q4 data by 31 January of the following year. NTAs then have 10 days to forward the aggregated reports to the central CESOP system maintained by the European Commission. 

The CESOP reporting process operates in three stages: First, PSPs report cross-border transaction data to their NTA and to each NTA if operating in multiple EU countries every quarter. Second, the NTA forwards the aggregated report to the central CESOP system operated by the European Commission within 10 days. Third, CESOP returns a structured feedback file to the PSP (via the NTA), indicating whether the report was accepted, highlighting any structural errors in the XML file, or flagging content-level corrections required.

LUXHUB’s CESOP portal provides end-to-end support for PSPs through the entire reporting lifecycle. The solution enables PSPs to check and pre-process their input data to ensure data quality; filter and convert cross-border transaction data files into the required XML format; use a web interface to review, edit, and correct reports before submission; automate the transfer of validated reports to the NTA where technically feasible; and efficiently manage CESOP feedback files and implement required corrections. Two deployment options are available: on-premises installation or managed services. 

CESOP requires payment data to be submitted in a specific XML format defined by the European Commission’s CESOP reporting guidelines. LUXHUB’s solution handles the full transformation pipeline: from raw PSP transaction data through pre-processing, filtering, and conversion into the compliant XML structure. The built-in web interface allows compliance teams to visually review and edit the report before final submission, reducing the risk of format-related rejections by the NTA or the central CESOP system.

Penalties for CESOP non-compliance vary by EU member state, as each national authority sets its own enforcement framework under the Directive. However, CESOP is a legally binding EU obligation and failure to report or submit incomplete or inaccurate data exposing PSPs to potential fines, supervisory scrutiny, and reputational risk. Given the cross-border nature of the obligation, PSPs operating across multiple EU jurisdictions face compounded exposure if they fail to meet each NTA’s specific requirements and deadlines. 

Yes. PSPs operating in multiple EU member states must submit CESOP reports to each relevant NTA separately. LUXHUB’s CESOP portal is designed to manage multi-jurisdiction reporting efficiently, helping PSPs filter and segment transaction data by country, generate country-specific XML report files, and track submission and feedback status per NTA. This multi-country capability is particularly important for large pan-European payment institutions and cross-border banking groups.

Standard VAT reporting focuses on the merchant or business generating revenue and is submitted by the taxable person directly to their NTA. CESOP is fundamentally different: it places the reporting obligation on PSPs, not merchants, and focuses on the payment flow data as a proxy for identifying potentially unreported, or misreported, cross-border VAT fraud. CESOP data is collected and analyzed centrally by the European Commission to identify patterns that individual NTAs may not detect alone. 

LUXHUB offers two deployment models for its CESOP solution. On-premises deployment installs the CESOP tool engine within the institution’s own IT environment, giving it maximum control over data and infrastructure. Managed services deployment means LUXHUB hosts and manages the entire CESOP platform on behalf of the PSP, reducing internal IT effort and ensuring continuous updates as the regulatory environment evolves. Both models provide the same core functionality: data pre-processing, XML generation, and feedback management.

Yes. CESOP applies to any PSP that provides payment services within the EU, regardless of where the PSP is headquartered. Non-EU PSPs processing transactions where the payer is in an EU member state are subject to the same quarterly reporting obligations as EU-domiciled PSPs.  

When a CESOP report is submitted, the central CESOP system returns a structured feedback file identifying any errors or corrections required. LUXHUB’s CESOP portal includes dedicated tools for efficient feedback file management: it parses feedback XML automatically, highlights specific errors or rejected records.

LUXHUB brings unique regulatory and payments compliance expertise to the CESOP challenge. As a regulated entity, under the supervision of the Luxembourg financial supervisory authority, and with an established track record in EU compliance solutions (PSD2, VOP), LUXHUB understands both the regulatory intent and technical implementation of CESOP. Its solution is built by payments professionals, tested against real NTA requirements, and offered with dedicated support through the entire compliance lifecycle, from initial data assessment to quarterly submission and feedback management.  

Detailed information about LUXHUB’s CESOP compliance solution is available on the CESOP product page. You can download the product brochure or submit an enquiry directly via info@luxhub.com . LUXHUB’s compliance experts are available to walk through the solution’s features, and recommend the deployment model best suited to your organization.