Mandatory electronic invoicing: What sets the 5-corner CTC Model adopted by France apart

Electronic invoicing: A lever for compliance and efficiency to reduce the VAT gap

The VAT gap mainly depends on:

• The size of the informal economy, i.e., all economic activities that escape official state control and are underreported or not reported at all to tax authorities
• The effectiveness of tax administrations
• The digital maturity of tax processes

Every euro not collected represents a direct loss for the state. Digitalized controls, combined with an interoperable and standardized model, secure revenue while generalizing electronic invoicing practices nationwide for greater operational efficiency.

Experience has shown significant results. According to the latest Billentis report, digital tax compliance programs have reduced the VAT gap by up to 50%. Recent declines in Europe are partly cyclical (COVID-19, Brexit), but the structural lever is clear: digitalization is the sustainable engine to secure tax revenues.

Examples of impact:

Electronic invoicing is one of the most effective anti-fraud tools ever deployed.

From tax control to economic value: The CTC electronic invoicing model

Continuous Transaction Controls (CTC) go far beyond simple tax compliance. According to Billentis, a country adopting the 5-actor model could generate 5 to 11 times more economic gains than the additional VAT revenue alone, thanks to automation and optimization of B2B business processes. The benefit is therefore not only fiscal, but also economic and operational.

Overview of CTC electronic invoicing models

Over the years, the way taxpayers submit their tax data has evolved significantly. VAT and other indirect taxes must now be reported via what is called Digital Reporting Requirement (DRR). This follows a clear trend: moving from Periodic Transaction Controls (PTC), such as traditional VAT filings or SAF-T formats, to Continuous Transaction Controls (CTC). The main advantage for tax authorities is near-real-time access to data, allowing more effective fraud detection and prevention.

Since 2005, several CTC e-invoicing models have emerged:

Emergence of a new model: Decentralized CTC & 5‑Corner exchange

Based on these experiences, a next-generation model has emerged: the decentralized CTC and exchange model, called the 5-actor model (5 corners/pillars, simplex or duplex). While its implementation is the most complex, this model combines benefits for tax authorities and businesses, allowing companies to optimize business processes.

Today, this model forms the foundation of France’s implementation and could be adopted by many countries by 2030, potentially becoming an international standard for electronic invoicing and continuous tax controls.

Principles:

• Validation and exchange of data via certified providers, not directly by the tax authority
• Subset of data transmitted to the central tax platform
• Simplex (seller only) or duplex (seller + buyer)
• Interoperability standards between providers for document exchange

Advantages:

• Progressive deployment
• Tax audit based solely on strictly necessary data
• Suitable for SMEs (low-cost or free services for a limited number of invoices)
• No single point of failure
• Opportunity to accelerate and optimize the automation of the commercial cycle.

Disadvantages:

• Dependence on certified providers for transmission to the tax platform
• Requires provider certification under technical and financial standards

Adopting countries:

• Emerging model, expected adoption in many countries by 2030, including France

The 5-corner CTC model: Preparing for ViDA and Finance AI

According to Billentis, this model will be adopted by many countries by 2030 as it not only secures VAT but also creates a robust fiscal and economic ecosystem with “orchestrated” tax models where data flows better, faster, and generates economic value beyond compliance.

This model also aligns with the European ViDA reform. While ViDA does not mandate a single technical model (clearance, centralized, or 5-corner), it envisions strong digital data reporting (DRR) with structured electronic invoicing, precisely the principles of Continuous Transaction Controls (CTC). France’s decentralized CTC and continuous e-reporting model is fully in line with ViDA’s European vision.

It also lays the groundwork for Finance AI industrialization which requires four conditions:

The decentralized CTC & 5-corner exchange model meets these requirements for scalable AI:

This model prepares the future of intelligent, interoperable, European finance.

As a fully certified platform, Medius supports mid-sized and large companies to both ensure compliance with the reform and enhance automation of their procure-to-pay, accounts payable, and expense management processes.