France is set to impose the CTC model of e-Invoicing. This will help close its VAT gap and enforce improved compliance with tax laws in general. The legislation affects all B2B transactions in France. Any business, with a registered company in France, will be affected and is advised to start planning now in order to be compliant in time.
CTC – The New Black
The CTC model is fast becoming a fashion trend amongst public administrations. Continuous Transaction Control (CTC) is the model in which copies of all B2B invoices are shared with or are pre-approved by the state in near real-time. The key concept is that digital transparency allows the state to keep a better running tally of taxation fees it is due, and the affected businesses are also made more wary of the amounts owing. Plans to impose the CTC model are being introduced by an increasing number of countries worldwide.
What started in the EU as a directive for mandatory business to government e-invoicing has started panning out into a raft of B2B e-invoicing mandates, a substantial proportion of which involve the CTC model. In France, as in India and Mexico, businesses will need to obtain clearance from the central tax platform before being able to send their invoices to the customer.
Who and When?
The CTC rules are being imposed in a phased approach with large companies being the first affected. By 2025 all B2B transactions will be affected but for the short term it is large businesses that need to prepare now. From 1st January 2023, large businesses will need to send and receive e-invoices for all in-country trades. Cross border trades will remain out of scope initially. A year later, medium sized businesses will be affected, and by 1st January 2025 all businesses in France will need to send and receive e-Invoices.
Unfortunately, as we have said several times before, there is no standard for an e-invoice and each country or industry that mandates it seems to vary the electronic data format and the model for sending and receiving invoices. For businesses, the challenge becomes one of electronic conformance, the cost of which can be considerable. Enterprises with dealings in multiple countries need systems that can translate the core data from an order into an invoice in different languages for different customers. The cost of buying that digital capability can become a tax on taxation if the business is not savvy in how it equips itself to provide electronic invoices to its various customer groups.
The International Chamber of Commerce (ICC) is vociferous in its efforts to create standards but sadly, few governments appear to be listening. Disharmony is inevitable and as more countries adopt variations of the CTC model the outlook for global Order-to-Cash teams looks complicated – unless of course, your business has partnered with Data Interconnect. We work on behalf of a wide range of companies globally and design our systems and connectivity solutions to speak the various languages of e-Invoice data format that apply globally.
The best way for businesses concerned that they may be affected to prepare is to enter dialogue now with specialists like Data Interconnect.
If your organisation has a compliance team, or tax advisors, this is an area they should be heavily involved in. Depending on the ERP or accounting systems your organisation uses, the steps needed to prepare to meet legislation in relevant countries like France can take months.
At Data Interconnect we have solutions that drastically reduce the timeframes involved, but we nonetheless advise teams to think strategically about their global Order-to-Cash capability and look for an elegant long-term solution rather than a patchy tactical approach to meeting in-country requirements or the ad hoc e-invoice demands of a handful of customers. One thing is certain: e-invoicing will become more complex for every business as public administrations worldwide go digital.
Talk to our experts today – https://www.datainterconnect.com/corrivo/demo/