Could Pandora's box have been opened ? This is the question that can be asked after the final conviction of the Portuguese tax authorities by the Supreme Court of Portugal. Indeed, the Supreme Administrative Court upheld the decision of the arbitral tribunal, which obliges the Portuguese tax authorities to return part of the ISV paid upon the importation and registration of a used foreign car. This decision will be a precedent and will serve as a basis for future decisions in similar cases. And many expatriates who are now wondering whether they can also claim a refund of the ISV tax that is often debated, both the amount and conditions of exemption are considered "hard" or even illegal according to Brussels. What is the final decision of the Portuguese Supreme Court on the ISV tax ? Will we see the ISV tax disappear ? Can we ask for a refund ? Lisbob, the expatriate assistant in Portugal, tells you all about this decision to refund the ISV tax for an imported car.
A saga that ends, or a beginning of many procedures?
The "saga" of taxes paid by used cars imported into Portugal continues. The Portuguese Supreme Administrative Court decided to dismiss the appeal lodged by the Tax and Customs Authority (TA), ordering the tax authorities to return part of the vehicle tax (ISV) collected on the importation of a used car.
The appeal was filed after the arbitral tribunal had already ruled on the case and ordered the tax authorities to return to a taxpayer a portion of the ISV cashed on the importation of a used car. This is a conflict that arose after a change in legislation, which has changed the way the ISV tax is calculated and applied to imported used vehicles.
In detail, the variable "devaluation" was introduced by the European Court of Justice (ECJ) in 2009: in the calculation of the ISV for imported used vehicles and if the vehicle is less than one year old , the amount of tax is reduced by 10%, gradually going up to 80% discount if the imported vehicle is more than 10 years old.
The Portuguese State applies this reduction rate only to the engine capacity component, leaving aside the CO2 component, forcing imported used vehicles to pay an ISV value without any devaluation with regard to the environmental component. Clearly, the Portuguese state levied higher ISV taxes than they should have.
The Pandora's Box open?
Since the decision of the Supreme Administrative Court has now been given, the tax authorities are therefore obliged to return the excess tax to the taxpayer who has lodged a complaint. In addition, this decision could be found in future cases similar to those of the case law.
Indeed, the amount of the ISV tax is often cringe, with amounts that can easily reach € 30,000. It is possible to be exempted from this tax when importing your vehicle, but with draconian conditions. There are also many expatriates who have had to pay a tax when registering their car and who will wonder if they too can benefit from this refund of the ISV tax.
The issue of the ISV tax paid for used cars imported into Portugal has already led this year to the opening of an infringement procedure by the European Commission, and this year also the rules of calculation of the IUC imported used vehicles have been revised.