Slovakia plays a significant role as a transit country in European trade due to its strategic location in Central Europe. It borders Austria, the Czech Republic, Hungary, Poland and Ukraine, making it a key transit hub for goods moving across the continent. In 2014, when the European Commission requested all parties to the Convention of 20 May 1987 on a common transit procedure to upgrade the IT system supporting the procedure,[1] Slovak Customs made it a priority.

The European Union New Computerised Transit System (NCTS) is the name given to the application which facilitates electronic declaration processing among parties to the Convention, namely the 27 European Union (EU) Member States, the four European Free Trade Association (EFTA) countries (Iceland, Norway, Liechtenstein and Switzerland), Türkiye, North Macedonia, Serbia, the United Kingdom and Ukraine. The common transit procedure enables traders to transport goods under Customs supervision between Contracting Parties to the Convention by virtue of a single electronic declaration and a single guarantee that is valid throughout the transit operation.

The NCTS is the digital backbone enabling real-time messages to be exchanged between countries, the tracking of goods and the management of guarantees, from one end to the other. It is a stand-alone application which has to be implemented by all parties. National NCTS applications are connected to their respective Customs Management System (CMS). Customs offices communicate and exchange standard messages electronically in their native language through the application. As for traders, they communicate electronically through the national CMS of the country they are operating from, but are not connected to the NCTS app.

The NCTS has been in use since 2005 and has been updated several times. The NCTS P4 had been in operation for almost two decades when a decision was taken to replace it as part of a wider initiative to modernize Customs systems arising from the Work Programme on the Union Customs Code (UCC). This update is soon to be followed by another, and NCTS P5 will be replaced by NCTS P6. These changes are motivated not only by the need to adapt the current system to technological improvements, but also by legislative changes which have brought new structures for Customs declarations or the introduction of new formalities for transit to harmonize practices from one country to another.

“The NCTS P5 is not just a technical upgrade, but represents a strategic shift towards more efficient and modern processing and exchange between Customs and economic operators”.
Jozef Kiss, President of the Slovak Financial Administration

Some of the changes under the NCTS P5 are presented below:

• the system will be interfaced with other IT systems, such as the Automated Export System (AES) to support the scenario Export followed by Transit (the AES will soon be used to accept electronic export declarations and to exchange data electronically between Customs offices of export and Customs offices of exit);
• new data are required as specified under the UCC and the structure of the declaration has changed. The declaration now has four layers, instead of two:
  • the “envelope”, with a selection of data elements that are also included in other layers in the declaration,
  • the “master consignment”, which contains general information about the whole declaration, related to the transport contract,
  • the “house consignment”, with information on all the parties involved in the consignment,
  • the “item level” detailing information about the goods to be transported;
• the declarant is required to submit (at least) a 6-digit HS code (certain States used to require an HS code up to 10 digits, whilst others were satisfied with a generic or simplified description of the goods);
• the declarant can lodge the transit declaration prior to presentation of the goods, with the ability to amend the transit declaration before presentation;
• the person responsible for the procedure must state the amount of the guarantee to be reserved (the amount of duties and taxes) in the transit declaration;
• the registration of in-transit incidents has been simplified and must be carried out at the nearest Customs office of the national administration in whose territory the means of transport is located at that time. This office is now called the “Office of Incidents Registration” and is responsible for recording the incidents and dispatching the information to the Office of Departure, which then forwards it to the other offices involved;
• a new office role has been introduced, dubbed the “Office of Exit for Transit” for the point of exit from the EU Safety and Security Area (EU, Switzerland and Norway[2]) to assess the new security and safety data in the declaration.

NCTS P6 focuses on the implementation of specific new data requirements, including data motivated by safety and security concerns.

Each common transit country is responsible for deploying NCTS P5 and NCTS P6 through their national systems according to a common set of specifications and within a set transition period. Slovak Customs was able to launch NCTS P5 at the end of July 2024, while other countries are still finalizing its implementation.

The completion phase required testing and fine-tuning of the application.  Compliance tests were carried out in cooperation with other countries and trade operators that were selected by the European Commission.

The changeover from NCTS P4 to NCTS P5 was direct, with one system being turned off and the other immediately turned on. Processes to solve technical and procedural problems were updated and a crisis communication plan was prepared in case the NCTS P5 application did not work properly, which fortunately did not happen.

The transition to the new system required training of Customs officers, including those working at border crossing points. After working for 20 years with NCTS P4, they had to learn how to process the new Customs declaration and how to manage the new transit system.

Economic operators had to adapt their software to connect to the NCTS P5 system. Regular meetings were organized to inform them of the changes that had to be made to software and the information was made available on the website of the Slovak Financial Administration.

Training was also provided to the staff of the Customs and Excise Support Centre to answer questions and solve problems related to the connection and use of the new system. An application called the ‘Live Agent’ was developed to allow the Customs and Excise Support Centre to centrally manage queries, harmonize answers to frequently asked questions and improve them.

Economic operators connect to the Live Agent to ask questions and report problems related to the connection and use of the new system. Trade operators can communicate in English. They reported having problems in sending messages from their system, encountering communication failures between the Customs Decisions System and NCTS P5 (e.g. for the placement of goods) or having difficulties in completing Customs declarations.

Customs officers also used the Live Agent service to report incidents and receive guidance and instructions on how to resolve problems. Technical problems have been raised, such as connection issues with backend systems. In addition, clarification has sometimes been needed on the procedures to be applied.

The launch of NCTS P5 is only the first step in a broader process of modernization of Customs IT systems in Slovakia. In the coming months, the Automated Export System (AES) will replace the current ECS (Export Control System) to allow for better monitoring of goods exiting the EU Customs territory. Once the deployment of AES has been completed, the Slovak Financial Administration will focus on the implementation of NCTS P6.

These new applications will significantly decrease the time required to process trade operations, increase transparency and reduce red tape, making life easier for the business community. As President Jozef Kiss declared, “these new systems open the door for more efficiency in the Customs clearance process and contribute to building a more enabling environment for trade while enhancing enforcement capacities”.

More information
international@financnasprava.sk
Projekt NCTS-P5 – PFS (financnasprava.sk)

[1] In 2013, the European Commission published Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code. This was followed by the Commission Implementing Decision of 29 April 2014 laying down the work programme for the Union Customs Code in 2014. This work programme for the Union Customs Code made it obligatory for Member States to implement the NCTS P5 project. Between 2014 and 2023, the work programme was regularly updated.

[2] Switzerland and Norway have agreed to apply the same security and safety measures as the EU. This includes participation in the Import Control System 2 (ICS2). For an explanation of ICS2, see https://mag.wcoomd.org/magazine/wco-news-104-issue-2-2024/eu-ics2-the-dhl-express-journey/