Seller, buyer, certified agents and tax authorities in open e-invoice model
As global e-invoicing mandates expand, the long-term popularity of 5-corner e-invoicing decentralised model is emerging as the end game for most. It’s the eventual landing space for Belgium, and France e-invoicing has recently been overhauled to fully adopt it. Spain and UAE may also adopt the 5-corner model.
The 5-corner model interjects government to the reporting circuit to the 4-corner model between supplier and buyers, with the 5th corner representing tax authority submissions. But generally does not require pre-clearance by the government. It is typically support by Peppol network, ensuring full interoperability between all corners and the exchange of e-invoices between suppliers, buyers and tax authorities.
5-corner e-invoicing
There are five parties, or corners, to this model:
- Supplier of the goods or services, generating the e-invoice or a least the key data;
- Their service e-invoicing provider, which acts as the access point to foward the e-invoice. Often, especially for cross-border e-invoicing, this provider generates the e-invoice to local national standards;
- Buyer’s e-invoicing provider whose access point receives the supplier e-invoice.
- Buyer who receives the sales e-invoice for processing and payment
- Tax authorities, usually supported with the service metadata publisher (SMP) a registry that stores the metadata for a document recipient on the Peppol network.
This model is becoming increasingly popular based on business feedback that direct, pre-clearance submission of e-invoices to the tax authorities undermines well established trade and billing processes. It also creates a single point-of-failure in relying on the tax authority’s portal.
E-invoicing service providers and Peppol
E-invoicing service providers are generally registered / certified by the national tax authorities to meet processing, retention and security requirements. The may be specialist e-invoicing companies or, increasingly, ERP or accounting provider embedding e-invoicing into their packages.
In the EU, and spreading globally, their services are supported by the regulations and infrastructure of OpenPeppol, the authority operating the Peppol network. This ensures interoperability (seamless exchange) of e-invoice exchange between providers. The US-based DBNA network is an alternative.
Once processed, service provider transmits the tax-relevant data directly to the tax authorities, reducing the need for government intervention in data collection and platform maintenance. This decentralization allows private enterprises to innovate more rapidly, leading to increased market efficiency.
The model is gaining traction, particularly within Europe. For example, France’s upcoming e-invoicing system will adopt the 5 Corner Model, in contrast to the more centralized models seen in Italy and Poland. Spain and Belgium are also expected to transition towards this framework, with the latter initially implementing an interoperability model. The UAE has also announced plans to adopt a 5-Corner Model.
