The Tax Authority of Portugal (AT) has been ordered to return €2,631.73 to a foreign resident in the Algarve, following a bad ISV charge on a hybrid imported car.

According to Público newspaper, this amount (€2,631.73) corresponds to 75 percent of the Vehicle Tax (ISV), charged for a plug-in hybrid car that has been imported in 2021. The taxpayer in question paid the full amount of the ISV, but made a complaint, arguing that they were entitled to a 75 percent discount.

The case involved a Mercedes E-Class imported from Germany with CO2 emissions of 44g/km and a range in electric mode of 45-48km in an urban environment.

From the perspective of the car owner, taking into account that the first registration was from 2019, there should be a 75 percent discount on the ISV, as was the law in force until the end of 2020.

According to the ISV law until 31 December, 2020, the plug-in hybrid car would have a 75 percent discount on the ISV, as since 2015, the government has ensured a discount on this tax for hybrids with a minimum duration of 25 km in electric mode.

However, at the end of 2020, under the State Budget OE2021, the law changed: hybrids with a minimum duration of 50 km were entitled to 25 percent ISV, but with a compliance requirement: it is necessary that they get the CO2 increase to 50g/km, otherwise it will be charged at full price.

In this sense, based on the law approved under the 2021 State Budget, the Tax Administration obliged the car owner to pay the ISV at 100 percent, justifying that the car arrived in Portugal in 2021, after the change. In addition, AT argued that the vehicle had an electric range of less than 50km, which does not meet the criteria.

However, the court ruled in favour of the taxpayer, who is now set to receive their money back from the authorities.