Continuous Transaction Control Model Standardisation

Electronic invoicing, or e-invoicing, has become one of the most significant developments in global tax administration over the past two decades. As governments seek more efficient ways to collect taxes, close compliance gaps, and modernize business processes, e-invoicing has emerged as a powerful tool. Yet, as adoption accelerates, the diversity of models and frameworks worldwide has also led to confusion.

For businesses operating in multiple territories, the challenge is not whether to comply with e-invoicing mandates, but rather how to comply with a patchwork of models that differ by country, sector, and even transaction type. Recognizing this complexity, efforts have been made to standardise classifications of e-invoicing models. The aim is not to eliminate national differences, but to establish a common language that helps businesses, tax authorities, and service providers better understand and navigate the variety of systems in play.

This article explores the main categories of e-invoicing models, how they can be standardized, and what this means for the future of global tax digitalization.

Understanding the Basis of Standardisation

At its core, e-invoicing standardisation relies on two broad concepts:

1. Level of Tax Authority Intervention: how deeply tax authorities are involved in invoice validation and/or data collection.
2. Invoice Exchange Mechanism: the method through which invoice data flows between taxpayers, service providers, and authorities.

By combining these two dimensions, we can create a structured framework that categorises the wide variety of systems into recognizable, comparable tax compliance models. This framework draws inspiration from the CIAT Digitalisation Classification Matrix, which has proven to be a good foundation for analyzing tax digitalisation initiatives worldwide.

Models by Level of Tax Authority Transaction Intervention

The first dimension distinguishes between real-time controls and periodic reporting. Three major categories emerge:

1. Continuous Transaction Controls (CTC): Clearance Models

In clearance models, invoices must be sent to the tax authority for acceptance or clearance before or at the time it is issued. This gives the authority real-time oversight of transactions. These real-time invoice clearance models are common in LATAM, APAC and older European models.

Example: Italy’s e-invoicing system is a centralised clearance model where invoices must pass through the government’s platform before being shared with recipients.

2. Continuous Transaction Controls (CTC): Reporting Models

In invoice reporting models, invoices are sent to the tax authority in real-time or near-real-time, but the authority does not have the power to block or approve the invoice. Instead, the data is stored and analysed later.

Example: Hungary’s Real-Time Invoice Reporting (RTIR) system requires taxpayers to report invoices to the tax authority after sending them to recipients, but without seeking approval.

3. Periodic Controls (Post-Audit Compliance Models)

Periodic controls require businesses to submit aggregated transaction data at regular intervals (monthly, quarterly, etc.). Unlike CTCs, these systems do not involve real-time oversight. Instead, tax authorities review transactional data retrospectively, often during audits. These are either still in the form of manual returns or submissions, or more structured methods such as SAF-T submissions (see our article on SAF-T submissions for more info).

Example: Many EU countries historically rely on periodic VAT reporting, at least before transitioning to CTC models.

Although periodic controls and CTCs can coexist, the trend is moving toward CTC compliance systems due to their ability to capture structured, granular data instantly.

CTC Models by Invoice Exchange Mechanism

The second dimension of standardisation concerns how invoice data is transmitted between businesses and tax authorities. Several distinct exchange models exist:

Centralised Exchange

All invoices pass through a single, government-run platform. The platform then transmits validated invoices to recipients.

Clearance Example: Italy: invoices are validated and cleared by the government platform.

Reporting Example: No country yet operates a fully centralised reporting-only model, but it remains a theoretical possibility.

Decentralised Exchange

In decentralised models, invoices are exchanged without a central authority-managed platform. Variants include:

Direct/Unregulated Exchange

Taxpayers are free to exchange invoices directly, often by email or proprietary integrations. Tax reporting or clearance  occurs separately.

Example: Brazil requires clearance but allows invoices to be shared directly with recipients.

4-Corner Model

Invoices flow through interoperability networks, where each party uses an access point (APs). The network ensures standards are met and certifies service providers. 

Example: Peppol network in Japan allows businesses to comply with the Qualified Invoice System, sending invoices via Peppol access points without reporting to the tax office.

5-Corner Model (mainly Peppol)

Similar to the 4-corner model but with the added requirement that one or both APs also report invoices to the tax authority.

Example: Belgium’s future e-invoicing mandate will adopt this model, where invoices will both be reported to the tax office and sent to recipients via Peppol.

Other Invoice Exchange Models

Countries may enforce specific, regulated, decentralised CTC methods without centralised platforms or interoperability frameworks to share business transaction data.

Example: South Korea uses multiple regulated methods where invoices are exchanged via service providers and simultaneously reported to the tax office.

E-Invoicing Prohibited

In rare cases, governments explicitly prohibit e-invoicing, requiring invoices to be issued only on paper. These models are increasingly rare and often transitional.

Hybrid and Emerging Compliance Models

E-invoicing mandates rarely fit neatly into one category. Instead, many countries adopt hybrid models, blending features of clearance, reporting, and periodic controls. For instance:

• A government may mandate clearance for domestic transactions but allow reporting-only for cross-border invoices.
• Businesses might be required to report structured invoices in real-time while also submitting periodic VAT summaries.

As digitalisation deepens, hybrid models are likely to become even more sophisticated. Authorities may combine real-time data collection with machine-learning analytics, using invoice data to pre-fill taxpayer returns, detect fraud instantly, and even provide proactive compliance guidance.

Case Studies of E-Invoicing Models in Practice

To understand the implications of these models, it is helpful to review examples from around the world:

• Italy (Centralised Clearance Continuous Transaction Control Model): A pioneering system where invoices must be through the government e-invoicing platform, after which the platform shares invoices with their respective recipients. This has significantly reduced Italy’s VAT gap.
• Brazil (Direct/Unregulated Clearance E-Invoicing Model): Invoices must be cleared by the tax authority but can then be shared directly with recipients, often in different formats (XML for tax, PDF for recipients).
• Hungary (Direct Reporting CTC Model): Businesses issue invoices to recipients first and then report them in real-time to the tax office, creating a lighter compliance burden than clearance models.
• Belgium (4-Corner and 5-Corner Peppol CTC Reporting Models): Initially, invoices are exchanged through Peppol with direct reporting to the tax authority. In its future system, one or both APs will also be responsible for reporting to the tax authority, moving toward a 5-corner model.
• Malaysia (Multiple Exchange Options): Offers businesses flexibility by allowing cleared invoices to be shared via Peppol, direct exchange, or other regulated models. Invoices must still be shared directly with the tax office for validation before they are transmitted to end-recipients.

These diverse examples illustrate why standardisation is so critical: without a shared framework, businesses risk becoming lost in a maze of overlapping rules.

The Importance of Standardisation in Tax Compliance

Standardising e-invoicing models is not about imposing uniformity but about creating clarity. By classifying systems based on common principles, stakeholders can more easily:

• Facilitate Cross-Border Trade: Multinational businesses can design compliance strategies that adapt more easily across countries.
• Support Interoperability: Service providers can build platforms that connect with multiple national systems without reinventing the wheel for each market.
• Enhance Policy Dialogue: Tax authorities can learn from one another’s experiences by comparing models within a clear framework.
• Reduce Compliance Costs: Standardisation helps businesses avoid duplicative efforts and better anticipate compliance obligations.

Looking Ahead: The Future of Electronic Invoice Models

The trajectory of e-invoicing points toward greater automation, integration, and real-time oversight. Several trends are shaping the future:

• Expansion of CTCs: More governments are moving from periodic reporting to clearance or real-time reporting models.
• Interoperability Networks: Frameworks like Peppol are gaining traction, allowing businesses to connect through common APs.
• Data Analytics by Tax Offices: Governments are increasingly using invoice data for predictive analytics, fraud detection, and pre-filled tax returns.
• Global Standardisation Initiatives: International organizations, such as CIAT, OECD, and the European Commission, are exploring ways to harmonize digital tax practices across borders.

Businesses must prepare for a future in which e-invoicing is not optional but integral to compliance. Having a clear understanding of the different models, and how they fit together, will be essential for long-term success.

Conclusion

E-invoicing has evolved from a niche compliance tool to a cornerstone of modern tax administration. The diversity of models worldwide reflects both the complexity of global trade and the creativity of governments in addressing tax challenges. Yet, without standardisation, this diversity risks becoming a barrier rather than an opportunity.

By classifying CTC and exchange e-invoicing models according to tax authority intervention and exchange mechanisms, we can bring much-needed clarity to a fragmented landscape. Standardisation empowers businesses, service providers, and governments alike to speak the same language, reduce confusion, and prepare for the next wave of digitalisation.

At eezi, powered by VATIT, we remain committed to helping businesses navigate this evolving terrain. With expertise across multiple jurisdictions and models, we stand ready to guide you through compliance challenges and ensure your invoicing processes remain efficient, secure, and future-proof.