Discriminatory import duty on second-hand cars: Portugal given one month to change its rules

Brussels has notified Lisbon that it has one month to change discriminatory taxation rules regarding second-hand cars imported from other member states and matriculated in Portugal.

If the system isn’t altered, the case will go to the Court of Justice of the European Union.

At issue is the State’s formula for calculating ISV (standing for Imposto Sobre Veículos).

Brussels says it is patently unfair, as it makes importing a second hand car much more expensive than buying one here, doesn’t take into account vehicle depreciation and thus violates article 110 of the Treaty of the Functioning of the European Union.

Two cases taken out by private importers have both ‘won’ in the courts recently – but still the AT tax authority refuses to budge (click here). Explain reports, the government fears that any climbdown could leave it liable to hundreds of thousands of euros in reimbursements.

Indeed still today the State mantra appears to be that it believes itself to be in the right.

Says Expresso: “Contacted the office of the finance ministry “confirmed reception of the European Commission’s reasoned opinion and reiterates the conviction that the current model of calculating ISV isn’t just in line with environmental commitments assumed by the government but is imposed as a matter of equal treatment of vehicles, old or new”.

The State’s argument is that old vehicles emit “the same level of CO2” as new ones and therefore should pay exactly the same duty.

Expresso continues: “The same source said the government will evaluate the notification from the European Commission “in the belief that the currently implemented solution is best in line with assumed environmental objectives”.

This isn’t the first time Portugal has been pulled up on its excessive duty on second-hand vehicle imports, but it is what Expresso terms “yet another defeat”, and defeats are coming now thick and fast.

Where this will lead is what importers are keenly waiting to find out.

A recent case, which the State tried to take to the Supreme Court failed (the Supreme Court ruled there were no grounds to hear the State’s appeal). The government then tried an appeal to the Constitutional Court which also refused to hear it.

Says Expresso, the ruling should now have passed in the plaintiff’s favour – and there are “various identical cases going through the courts”.

natasha.donn@algarveresident.com