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Peppol, the Four-Corner model and Continuous Transactions Controls

  • May 13, 2022 | Alex Baulf

Peppol, the Four-Corner model and Continuous Transactions Controls

Avalara attended the Peppol Americas workshop in Miami on May 9, 2022. The main objective was to gain a greater understanding of the issues that need to be addressed for Peppol to be implemented in the Americas. This included discussions around:

  • The four-corner model
  • Global document interoperability
  • Decentralised Continuous Transaction Controls and Exchange. 

The workshop also explored how the above can come together in either domestic or cross border scenarios. We have set out a summary of the key discussions and the background information and insights shared by Peppol.

What is Peppol?

By way of background, Peppol is the name of the Network and Business Interoperability Specifications that OpenPeppol provide, as part of a comprehensive Peppol Interoperability Framework, which includes legal agreements, governance and compliance measures. Peppol integrates business processes by standardising the way information is structured and exchanged under e-invoicing. Peppol enables trading partners to exchange standards-based electronic documents over the Peppol network based on a four-corner model.

What is the four-corner model?

Under the four-corner model, there are 4 corners underpinning the issue, exchange and receipt of e-invoices, namely:

  • C1 – Sender of Invoice (C1 sends e-invoice to C2)
  • C2 – Service Provider (C2 sends e-invoice to C3)
  • C3 – Service Provider (C3 send e-invoice to C4)
  • C4 – Receiver of Invoice (C4 receives e-invoice from C3)

Senders and receivers of e-invoices (C1 and C4) utilise their own choice of system/software and can exchange any document type. Service providers convert documents to standard specifications. Each sender and receiver only need one service provider. The end user has free choice of which service provider to use and is not locked into a service provider and can change. There are no fees charged between service providers but service providers charge their clients, usually on a per document basis. The four-corner model requires dynamic discovery to locate other service providers and end users.

Global document interoperability

Within Europe, interoperability is achieved across all 29 EU and EEA countries, as well as the UK, through:

  • European elnvoicing standard (EN 16931) - this is a standardised semantic invoice with syntax binding to UBL and CIl. It supports invoice related EU Directives, mainly the Principal VAT Directive (2006/112/EC). It is mandated as the receiving capability for all public bodies in EU member states (i.e B2G) as in line with the European Directive 2014/55/EU, all public bodies in EU member states must now be able to receive and process electronic invoices.

  • Peppol BIS Billing 3.0 – this is a compliant implementation of the European elnvoicing standard. Therefore, a European public authority or government body that has receiving capability for Peppol BIS Billing 3.0 is compliant with the legal requirement.

Outside of Europe, Singapore and then Australia and New Zealand joined Peppol. However, while business requirements are mostly the same in the APAC region and comparable to Europe, the main challenge was that European VAT rules do not apply and there is different tax terminology used e.g. GST v VAT. Extensions were made to the Peppol BIS Billing 3.0 with terminology adjusted, irrelevant rules removed and relevant local rules added. This achieved domestic interoperability however not global interoperability, for example an invoice created based on EU rules will not pass non-EU rules and therefore the transfer would be rejected. As a result of these challenges, Peppol created a globalised version of Peppol BIS Billing 3.0 based on the invoice document - its Peppol INTernational document model (PINT). Under PINT, Peppol BIS Billing 3.0 is extended in a way that can be restricted back to the same.

Peppol INTernational document model (PINT)

There are three levels:

  1. Shared – covering c.80% of specifications and defined and used in the same way across all PINT specifications (semantic meaning, code lists and rules). Shared specifications must be supported in the same way in all specialisations. This shared level provides the global interoperability.

  2. Aligned – covering c.15% and defined in general terms and can be understood by all domains. Specifications at the aligned level can be specialised (restricted) to support specific invoicing requirements.

  3. Distinct – covering c.5%  to support domain-specific requirements. Receivers may not necessarily understand this layer, unless they specifically advertise support for the specialisation. This level allows jurisdictions to add rules and include additional elements that may not have general application.

Decentralised Continuous Transaction Controls (“CTC”) and Exchange

Governments globally are increasingly seeing digitalisation as an effective mechanism to improve tax administrations and business efficiency relating to the collection of indirect taxes such as VAT/GST, as well as combatting the loss of indirect tax revenues due to poor administration, fraud and evasion.

Continuous Transaction Controls (“CTC”) is a generic term to describe the digital control mechanisms used by tax administrations to improve the management of indirect tax by collecting transactional invoice data in real, or near-real time. This is seen as a way to significantly reduce the VAT gap. Embedding CTCs within a 4-corner model involves bolting on 2 additional corners. A copy of the invoice or a subset of the invoice data, will be sent through to a service provider (C5) that acts on behalf of the Tax Authority (C6). It has been suggested that the European Commission (and several European tax authorities) are considering recommending the implementing Decentralised Peppol e-invoicing with CTCs and Exchange (this 6-corner model) as part of the VAT in the Digital Age initiative.

Avalara is an OpenPeppol member and has an e-invoicing solution that can help companies stay compliant in over 60 countries including using Peppol. 

Contact an expert at Avalara to discuss how we can assist with the upcoming e-invoicing mandates.


Alex Baulf as Senior Director, Global Indirect Tax, Avalara
Senior Director, Global Indirect Tax
Alex Baulf
Alex Baulf as Senior Director, Global Indirect Tax, Avalara
Senior Director, Global Indirect Tax Alex Baulf
Alex leads on global indirect tax at Avalara, leading on engagement with policy and business leaders to develop a tax and compliance environment that will streamline and accelerate commerce for the overall growth of the economy. With over 16 years experience in global VAT and GST and international indirect tax consultancy, Alex has specialised in analysing changing VAT requirements and advising on impact assessment and change management across processes, data and technology.
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