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ISV tax : Portuguese tax authorities once again lose a constitutional court case

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Portugal is keen on its ISV tax and will not give up, despite the setbacks that are accumulating. After losing the case before the Arbitral Tribunal, where the Portuguese tax authorities have already been ordered to reimburse the ISV tax on four occasions, the Portuguese tax and customs administration (TA) suffered another setback, this time before the Constitutional Court. Indeed, it was felt that with the decision of the Arbitral Tribunal, there was no question of a violation of a constitutional rule. However, the Court nevertheless invited the Portuguese tax authorities to reformulate their request, but the latter ended up presenting no new arguments and the appeal was considered to have been abandoned. Lisbob, the expatriate assistant in Portugal, tells you all about this new defeat of the Portuguese fiscal authorities regarding the ISV tax.

ISV tax : Portuguese tax authorities once again lose a constitutional court case

The Portuguese tax authorities could have appealed against his conviction: "he could still have asked for the intervention of the conference of the Constitutional Court, so that the process was appreciated by more judges, since the first was a singular decision, but all legal deadlines were exceeded without him having done so, "said lawyer Paulo Carido, who represented the taxpayer against the tax authorities.

The problem is how the Portuguese tax authorities calculate the ISV to apply to imported used cars. This tax has two components, one concerning the engine power and the other called the environmental component. According to Portuguese law, the reduction of this tax due to age affects only the displacement component, not affecting the environmental component. 

This is reflected in the final amount of this ISV tax, which artificially raises the value of the vehicle above the market price and strongly discourages imports. The Portuguese importers complained and one of them ended up going to court, winning for the first time an appeal on this issue. After that, three other cases had the same result, also before the arbitral tribunal.

IUC tax is a polemic topic between Brussels and Lisbon

The case presented yesterday was the first to go to the Constitutional Court, the tax authorities asking the judges to assess whether or not the arbitral tribunal could consider Portuguese law as illegal for violation of Community treaties. Rather, it was a violation of European treaties, everyone expected that the appeal formulated by the Portuguese tax authorities would be rejected, as it actually did.

In addition, the arbitral decisions known to date on this subject - there are several cases pending - have always been identical: the arbitral tribunal considered that Portuguese law was discriminatory by granting different treatment to cars imported from other States members. He considered that Portugal had violated the European treaties, and ordered the tax authorities to return the excess of the ISV tax collected.

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An interpretation of the law which is identical to that of the European Commission, which opened an infringement procedure in Portugal last January and which announced that, given the will of the Portuguese government not to modify the law, it was going to take the case to the European Court of Justice.

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