Government reduces tax to second hand vehicles from EU

By TPN/Lusa, in Business · 08-01-2021 01:00:00 · 8 Comments

The state budget has changed the formula for calculating vehicle tax applied to second hand cars imported from the European Union and has begun to take the environmental component into account to reduce tax depending on the age of the vehicle.

At issue was the ISV (Vehicle Tax) relating to second hand imported cars that had seen the Portuguese tax authorities igmoring rules imposed on the country by the European Union. The issue has already been taken to the European Court of Justice (ECJ), on the initiative of the European Commission. This situation led the government to change the rules.

Accordingto the state budget, an environmental component reduction factor was introduced, relating to the age of the vehicle, which should reduce the final tax to be paid by those who choose to import second-hand vehicles from the European Union.

The ISV has two components, one regarding cylinder capacity and another with the environmental component. However, under the Portuguese law that was previously in force, the reduction due to age only affects the cylinder capacity component, leaving out the environmental component. This causes the final price to increase at times, which leads to increases much higher than the effective market value and strongly affects imports.

Therefore, above all, it causes cars coming from other European countries to be given unequal treatment, which violates European treaties. So, these cars that paid for the 100 percent environmental component, as if they were new cars, were reducing the number of people who wanted to buy a second hand car from another UE’s countries, as expected.

The introduction of this reduction in ISV in the environmental component is the Government’s response to the condemnation by Brussels, which accused the country of discriminating against vehicles imported from other European countries. Because of that, several taxpayers have applied to the courts to be reimbursed for the amounts paid in the import of these cars, almost all of them won the respective lawsuits.

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Whilst there may or may not be reduction on isv of cars imported from the EU the amount charged is still barbaric, have just checked cost to import a 2005 VW Tourag, albeit a big petrol engined model, from Spain and the ISV is more than the cost of the car! What is the function of a free market economy if it is not a free market? I recall, whilst living in Spain, the cost to nationalise a used car from another eu country was something like the technical inspection cost and 6% invoice value.
So how can the federalists who want a common eu policy on all things still allow the Portuguese government to thumb its nose at Brussels, especially considering the amount of handouts it receives

By Matthew from Lisbon on 19-04-2021 01:21

It is really unfortunate that the environmental impact is not being considered. Older cars tend to be more inefficient and spew out more pollution - this should call for higher taxes to reduce the environmental damage and encourage the use of mass transport and electric vehicles.

By Ed Braz from USA on 29-01-2021 11:09

Will they refund on cars already imported from 2012.

By Arthur from Algarve on 13-01-2021 02:55

And when does the new settlement come into law?

By Inna from Alentejo on 10-01-2021 07:51

Can someone give a before and after example?

By Joe from Lisbon on 10-01-2021 03:11

So instead of producing a petty argument look at comparable car prices in Germany and Belgium.It is the same story.
All second hand cars here will lose massive value as they were artificially overpriced.
Is the government going to compensate the losses to car owners here,which stemmed from their illegal taxes?
If not why not and people will suddenly realise their cars are worth half of what they paid.

By James from Algarve on 08-01-2021 07:03

Sorry, James. UK has left the EU. So technically your comparison is not valid anymore. Furthermore it is quite dangerous to drive a right hand steering vehicle in Europe , so better leave these cars on your island, right?

By Peter from Algarve on 08-01-2021 12:50

This tax was always illegal as far as the EU is concerned,which resulted in many people paying far higher than market value for second hand cars in Portugal.
Therefore the government should compensate everyone that has been affected.
An example of this gross injustice is the same car will cost double the amount in Portugal as in the UK.

By James from Algarve on 08-01-2021 08:21
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