Portugal's tax and customs authority (TA) has been ordered to return part of the ISV, the import tax on vehicles, to a taxpayer who had imported a car from Germany. According to the court's decision, the calculation of the tax does not take into account the depreciation of the vehicle and is therefore discriminatory and illegal. This highly criticized tax can sometimes reach crazy sums, much higher than the amount of the vehicle. In addition, Brussels has already fined Portugal for this tax which does not meet the European criteria for free movement of goods and people. Lisbob, the expatriate assistant in Portugal, tells you all about this court decision that may mark the end of the ISV tax in its current form.
5.500 euros ISV tax deemed illegal
The Portuguese tax office has been ordered by the court to return to a taxpayer part of the vehicle tax imposed for the importation of a used diesel car. The stake of this trial was how the tax authority (TA) calculated the value of the tax, which does not take into account the age of the cars and that Brussels also considered discriminatory, reports the Jornal de Negócios (premium access).
In 2018, the Portuguese tax authorities calculated an amount of 5,500 euros of tax ISV to a taxpayer for the import of his diesel car from Germany, bought in 2017. The taxpayer willy-nilly paid the tax, but no did not stop there and went to translate the Portuguese tax system to justice. Henceforth, the decision of the Administrative Arbitration Center of Portugal (CAAD) gives reason to the plaintiff.
The calculation of the ISV tax is not simple. Indeed, it has a component that concerns the engine capacity of the vehicle and another environmental component, including the CO2 emission rate. In the first case, the component varies with the age of the car. But the same thing does not happen with respect to the environmental criterion. The taxpayer therefore argued that, according to Jornal de Negócios, there was a different treatment for imported and purchased vehicles in Portugal.
Portugal already caught up by Brussels
However, the Portuguese tax authorities argued that the purpose of the calculation formula used was "to comply with the European directives on the reduction of CO2 emissions [carbon dioxide, greenhouse gas]" and the "environmental responsibilities" decided on under the Kyoto protocol (note: visibly the Portuguese tax is not obliged to respect those of Paris). But an infringement procedure against Portugal had already been opened by the European Commission earlier this year for similar reasons.
The newspaper quotes the Brussels accusation that Portugal does not take into account the environmental component of the tax "for the purpose of depreciation". Therefore, the European Commission also pointed out that the Portuguese law "is not compatible" with European rules and gave Portugal a deadline to comply.