Tax department holds out for excessive duty on imported used cars

Portugal’s tax department is refusing to accept a Supreme Court ruling against ‘excessive duty charged on imported used cars’.

This is a case that has been fiercely fought all down the line.

Following the Supreme Court’s ruling last month – described as “a victory” for importers – tax authorities have appealed to the Constitutional Court. This is despite the fact that Brussels has already said that it believes Portugal is acting in a discriminatory fashion.

Explain reports, the Supreme Court’s ruling – that an importer should be reimbursed for excessive charges – will open the floodgates to demands for tax refunds.

The problem with the ISV tax (imposto sobre veículos) is that it doesn’t take the age of the second-hand vehicle coming into the country into account.

This way, purchasing a used car or van here almost invariably ends up ‘cheaper’ than importing one from overseas.

Brussels considers Portugal’s legislation violates article 110 of the Treaty of the Functioning of the European Union, as used vehicles from other member states are taxed more that vehicles purchased on national territory.

The tax department, on the other hand, seeks to justify the law on what Expresso calls ‘environmental grounds’.

Aside from not elaborating on these grounds, the paper admits that the European Commission – “isn’t convinced”.

Expresso adds that the case under appeal refers to just one importer, but “there will be identical cases going through the courts” at various levels – and that’s what the AT tax authority is all too keenly aware of.

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