The rise of e-invoicing CTC models across the world

21 Abril 2022

Escrito por: Eduardo Olabe

What are continuous transaction controls for e-invoicing? Find out about CTC models and solutions for keeping up with developments.

What are continuous transaction controls (CTC) for e-invoicing and why are governments turning to them to strengthen their economies? Find out about CTC models being adopted around the world and solutions for keeping up with developments in your markets.

Why governments are choosing continuous transaction controls

Not so long ago, tax authorities began realizing they were losing tax money by using paper invoices as the principal means for recording and reporting business transactions. Since then, governments have started to take action against tax evasion in new ways.

This blog will not to talk about the benefits of e-invoicing or business automation, rather define and describe different models and requirements that governments implement to reduce tax evasion. Namely, you’ll discover more about continuous transactions controls, or CTC models. 

What are continuous transaction controls (CTC)?

Continuous transaction controls (CTC) enable law enforcement agencies, such as tax administrations, to collect data on business activity in their countries. Unlike traditional invoice reporting, data is obtained directly from business transaction processes or data management systems in real time or near-real time.

CTC addresses the inefficiencies that have always characterized the use of retroactive audits, wherein auditors obtain information on transactions long after their conclusion. In traditional audits, they must also rely on data stored by the very businesses they seek to audit.Continuous transaction controls remove dependency on historical evidence ledgers by making it possible for tax administrations to gather relevant information in the form of a dynamic business transaction ledger.

While some countries do still use post-audit models, most have begun to adopt various CTC models. Although not a rule, geographic location can affect market patterns in CTC models from region to region. 

Service providers can agree amongst themselves which formats to exchange, resulting in open networks with many interoperable formats and service providers.


Clearance model

Back in 2002, we saw countries like Mexico and Chile start implementing certain requirements for taxpayers. Businesses had to “clear” or “authorize” invoices via tax authority platforms before they could send them to the end recipient (buyer). This CTC model rapidly gained traction, with most Latin American countries deciding to adopt it. However, each country has implemented its own flavour of this CTC model.

Some countries like Mexico, Guatemala and Panama have delegated invoice clearance to Accredited PAC Service Providers (Sp. Proveedor Autorizado de Certificación) instead of local tax authorities.

Pre-clearance or hard clearance models require invoices to be cleared through local government agencies before sending them to the buyer. Other countries such as Chile and Peru have gone with post-clearance or soft clearance models. These allow taxpayers to distribute tax invoices to the buyer before sending them to the tax authority for clearance shortly afterwards.

The clearance model has been expanding to other countries such as India, Saudi Arabia and some countries in southeast Asia.


Also called a 4-corner model, the main particularity of interoperability is that taxpayers use a service provider to exchange e-invoices. Moreover, service providers can agree amongst themselves which formats to exchange, resulting in open networks with many interoperable formats and service providers.

Interoperability is not considered a CTC model because the tax invoice audit happens months or even years after transactions occur. The main goal of the interoperability model is to facilitate business automation and digitalization.

Peppol and Peppol CTC

Peppol is a network that allows the electronic exchange of various documents, including e-invoices. It requires taxpayers to use services of a Peppol Service Provider, or Peppol Access Point, to exchange documents within the Peppol network (a 4-corner model). Access Points are service providers that can generate, send and process the Peppol BIS format, based on UBL 2.1 or CII.

The main difference between Peppol and the interoperability model is that the exchange mechanism is regulated by Peppol, so service providers can only exchange documents in the Peppol BIS format. Even though invoice exchange via Peppol is mandatory in some countries, (e.g., Sweden, Finland, Norway) it is not considered a CTC model because there are no tax authority controls involved.

Peppol CTC is the upgraded version of the current Peppol 4-corner model. In this CTC model, Peppol Access Points report transaction data to tax authorities or via official platforms in real time. This is a great model to allow both automation for businesses and greater control over the economy for tax authorities.


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Centralized model

Since the release of the EU Procurement Directive obliging public entities to accept e-invoices, many European countries have implemented new requirements. Mandated e-invoicing from suppliers to government entities (B2G) is becoming common ground across the EU.

Belgium, France, Italy, Portugal, and Spain are just a few markets that have already established infrastructures for receiving invoices on behalf of public buyers. Some countries have selected Peppol as the mandatory exchange mechanism within the centralized model. In these cases, the mandatory platform in the country receives Peppol invoices on behalf of every public entity.

In 2018, Italy went even further and obtained an EU Commission derogation to mandate e-invoicing in the business sector. Every business in Italy is now required to send FatturaPA e-invoices to SDI for the latter to deliver the invoice to the buyer. This led to a successful reduction of tax evasion and more opportunities to strengthen the economy, inspiring other European countries to implement similar models for the same outcome.

Now, Poland is planning to follow suit and adopt this model on a countrywide level starting in 2023.

Real-time invoice reporting model (RTIR)

RTIR is a model established in Hungary and South Korea for which there are no regulations regarding invoice exchange. Still, the supplier must report a subset of the invoice to their tax authority in real time after sending it to the buyer. The e-invoice must be in the mandatory format and include specified data such as document type, name and VAT number of trading parties and VAT amounts.

If you do business in markets that have already adopted continuous transaction controls, it’s important to note that not all CTC compliance solutions are the same.


France: All CTC models in one

Last but not least we have France, which is quite complicated in terms of e-invoicing. The government did not want to select a single CTC model, opting instead to allow them all.

Starting July 2024, France will gradually roll out a mandate wherein businesses must both send and receive e-invoices. Companies will send e-invoices for clearance either via the centralized model Chorus Pro or through a certified service provider (PDP). The PDP reports to Chorus Pro in real time and agrees on the invoice delivery mechanism with the recipient’s PDP.

The new, more business-friendly Peppol CTC model would likely be a simpler approach for France. Peppol CTC tends to be more straightforward and beneficial for all stakeholders compared to an approach involving multiple models.

Comply with continuous transaction control requirements

If you do business in markets that have already adopted continuous transaction controls, it’s important to note that not all CTC compliance solutions are the same. Researching the options available for your key markets will ensure you find the right solution for your business. For those who have not yet encountered CTC, it’s never too early to investigate solutions that can help you meet future regulations.

Pagero’s CTC experts are dedicated to providing the most recent and relevant updates for as many markets as possible. Get in touch with us to learn more about CTC models and solutions that can help your business stay compliant.


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