Never 2 without 3. The Portuguese Tax and Customs Authority (AT) was again ordered to refund part of the tax on imported vehicles (ISV) it had collected for a used car from the foreign. This decision dates from last week but Portugal is doing everything to remain discreet, as the question of the ISV could open a Pandora's box. It is indeed the third unfavorable conviction in a row from the Portuguese State, which does not comply with judicial decisions and tries to win the dispute before the Constitutional Court. Despite Europe's admonitions, Portugal decides to continue its momentum. Lisbob, the expatriate assistant in Portugal, tells you all about the Portuguese government’s new defeat over the ISV.
Portugual again condemned to reimburse ISV tax for imported vehicle : Lisbon challenges Brussels
804.78 euros to be reimbursed
In the case in question, the Portuguese Treasury is ordered to reimburse 804.78 euros, plus interest for compensation, to an importer of used vehicles based in Mealhada, in the district of Aveiro. The challenge: four used cars that the taxpayer decided to bring back from France in 2019, and the case was settled at the Center for Administrative Arbitration (CAAD) in Lisbon.
When the vehicles were legalized, the tax authorities reduced the amount of the ISV payable by the importer for the displacement component, taking into account the age of the cars, but did not update this factor in the environmental component (these are C02 emissions). "Despite the provisions of European legislation, Portugal has not taken into account the percentages of reduction of ISV" in the environmental component, concludes the judge of the Center for Administrative Arbitration.
This calculation method has been challenged before the Portuguese courts and the European Commission has also urged the Portuguese State to modify the ISV rules, invoking Article 110 of the Treaty on the Functioning of the European Union, which requires each Member State to structure taxes on motor vehicles in such a way that they do not have the effect of promoting the sale of national used vehicles and thus discouraging the importation of similar used vehicles.
ISV tax is a polemic topic between Brussels and Lisbon
ISV tax illegal, but Lisbon ignores Brussels ultimatum
But the Portuguese government has already reaffirmed on several occasions that it has absolutely no intention of changing its method of calculating the collection of the much-maligned ISV tax, despite the ultimatum imposed by Brussels last month.
For Brussels, Portuguese legislation does not take into account the total depreciation of cars imported from other Member States and is therefore not compatible with European rules. It considers that this requires a modification of the method of calculating the ISV on imported second-hand vehicles, its depreciation depending on the age to be taken into account in the environmental component of the tax.
The Portuguese government, on the other hand, is convinced that “the current model for calculating the ISV for vehicles is not only consistent with the environmental commitments made, but also because of the equal treatment of vehicles with regard to the ISV, because at the same level of CO2 emissions, vehicles, new or old, pay the same tax, strictly based on the way they pollute ”, according to the details provided by the Portuguese Ministry of Finance.
Disputes over the ISV tax on imported used cars have been going on since 2017. At that time, the law was changed in the state budget, the ISV code now providing for a tax that does not take depreciation into account linked to the age of imported used vehicles. Indeed, it was the same year that Brussels opened an infringement procedure against Portugal.
