Anyone who is newly licensed as a payment service provider, for example under a ZAG licence in accordance with Section 1 (1) ZAG, has a lot to consider: technical setup, customer onboarding, initial transactions. What is often overlooked is that the licence also comes with the obligation to report to CESOP – and this comes into effect sooner than many expect.
In the dynamic initial phase in particular, it is easy to postpone regulatory requirements, often with the thought: ‘We’ll do that later when the volume increases.’ But that is precisely what is risky. Many payment service providers (PSPs) with new licences under the Payment Services Supervision Act (ZAG) are unaware that the CESOP reporting obligation is not linked to turnover or licence types, but simply to whether you process payments for merchants or recipients who receive more than 25 cross-border payments per quarter. This can happen even with just a few active customers or test users, unnoticed and without warning.
In addition, the report must be submitted quarterly, in detail and on time, including the recipients’ full address and tax data. Anyone who realises too late that they are affected cannot simply submit the data retroactively without considerable effort.
We are currently seeing an increasing number of cases in which young payment service providers, especially those with newly granted ZAG licences, only become aware of their reporting obligation through a query procedure by the Federal Central Tax Office (BZSt) or even through the consequences of failure to comply. This can be expensive and tie up massive resources during the growth phase.
We have developed our CESOP Compliance Service (CCS) tool precisely for this case. It offers a ready-to-use solution for PSPs that do not want to set up their own reporting infrastructure but still need to be legally compliant and future-proof.
The CCS tool takes care of the following for you:
- Connecting your transaction data sources
- Automatically identifying recipients subject to reporting requirements
- Correctly preparing and validating data in EU-compliant XML format
- Securely transmitting data to European tax authorities (including the BZSt via the DIP procedure)
- If required, connecting to reporting systems in other EU member states
- Handling of returns, including intelligent error interpretation and correction options
- A web-based dashboard for an overview of all reports – audit-proof and exportable
Practical experience has shown that minimal solutions such as internal exports and manual uploads quickly reach their limits, especially when returns occur or technical changes are made on the BZSt side. Those who do not have a dedicated solution here lose time, tie up resources and run the risk of violating reporting obligations.
For new PSPs, especially payment institutions regulated under the ZAG that are just starting out in the market, the CCS tool is the safe choice. It is quick to deploy, modularly integrable and fully designed to meet CESOP requirements.
Conclusion
If you have recently obtained your licence or will soon be actively processing transactions in the EU, now is the time to consider CESOP – not next quarter. Our team will support you from connection to productive reporting – professionally, technically and in compliance with legal requirements. Let’s talk before your reporting obligation becomes a reporting problem!
You can also read about the challenges of CESOP reporting practices in our article “CESOP in practice – where minimal solutions reach their limits”.
