European Commission forcing Portugal to change taxes on imported used cars

After opening an infringement procedure in January, the European Commission has now sent a Reasoned Opinion giving the Government a period of one month to change national legislation. If the Government does not comply, the next step will be the European court.

The Government has one month to change the way in which used cars imported from other member states are taxed in Portugal. If it does not do so, the European Commission will consider taking the case to the European court. The decision was communicated to the government on Wednesday and follows the infringement proceedings opened earlier this year.

Since then, the Ministry of Finance has presented its case to Brussels, but this has not been enough for the Commission to change its position.

At issue, it is recalled, that in calculating the Vehicle Tax (ISV) applicable to imported used cars national legislation does not take into account the age of the cars when calculating the environmental component of the tax for depreciation purposes. .

Speaking to the Business, Vanessa Mock, spokeswoman for the Commission for Tax and Customs Affairs, explains that “this means that used cars imported from other Member States are taxed more heavily compared to used cars bought in the Portuguese market, which brings difficulties for small car dealerships and higher prices for consumers. ”

Brussels believes that this is a matter of competition within the Community, as the country “discriminates against foreign cars” and therefore Portuguese legislation “is not compatible with single market rules” and treaties, more precisely with the Article 110 of the Treaty on the Functioning of the European Union (TFEU) on freedom of movement.

At this point, Vanessa Mock goes on, there is no doubt that this is a “problem that needs to be solved” and “the sooner the better”. The Commission has been receiving “a significant number of complaints” and has “an indication that SMEs in the sector are under pressure because of current legislation”.

António Mendonça Mendes, Secretary of State for Tax Affairs, has confirmed to the Business that he has received the reasoned opinion, but says that he is still “assessing how to respond to Brussels”.


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