Constitutional judges refer ISV ‘imported car headache’ to Court of Justice of European Union

The way Portugal has been applying the ISV (vehicle tax) on used imported cars from other EU countries is to be ‘considered’ by the Court of Justice of the European Union.

At stake are “tens of millions of euros”.

As things stand right now, thanks to an ‘unprecedented decision’ by arbitrators in Lisbon last December, anyone who has imported a car into the country since 2017 can seek compensation for the fact that the taxation formulae was used in a discriminatory way (click here).

Understandably (because of the Pandora’s Box of liabilities unleashed), the AT tax authority – which waged said formulae – has appealed. 

This appeal has now seen judges at the Constitutional Court lob the whole complicated problem to the Court of Justice of the European Union.

Explain reports, the decision published today in government newspaper Diário da República is “another episode in the long soap opera that sets the taxman against importers of used cars”.

But in this case, it is a “victory, although preliminary, for the AT tx authority” – because what has essentially happened is that the Constitutional Court has ‘accepted’ their appeal, seeking guidance from the CJEU.

At the heart of this saga is whether (or not) Portugal’s taxation of 2nd hand imported cars really does contravene European treaties, namely the Treaty of the Functioning of the European Union.

If CJEU judges conclude that it does, the Portuguese State may have nowhere else to turn – and will have face the hideous prospect of repaying “tens of millions of euros” in unfairly levied taxes.

natasha.donn@algarveresident.com