E-commerce has led to a rise in digital payment for goods and services, resulting in a transformation from traditional banks to fintech companies. Though there is a specific VAT exemption for payments and transfers, its scope and applicability have been the topic of numerous cases in the Court of Justice of the European Union. The EU Commission is discussing VAT implications arising from the digitalization of the payment sector to promote uniform application of VAT provisions. From January 1st, 2024, payment service providers must comply with new recordkeeping and reporting obligations under the EU Payment Services Directive to prevent VAT fraud. This paper provides insights on VAT treatment for payment sector business models and key takeaways on new VAT reporting obligations.
Source BDO
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