Portuguese taxes on cars

Since 1988 there is in Portugal a tax called "Imposto Automóvel" (IA - Automobile Tax) that you indirectly have to pay when you buy a new car. The importer pays it to the government and includes it in the final price.

This tax is calculated multiplying the cubic centimeters (displacement) of the car's engine by a value minus a predefined value. You can see the current rates here (page 10).

One of the reasons why this tax is so criticized in Portugal is because IA is subject to Imposto Valor Acrescentado (IVA/VAT - Value Added Tax) at 21%.

When you buy a new car you pay: car's base price + IA + 21% IVA/VAT.

In 2006 the government in functions decided to add an "environment component" (Componente Ambiental) to the tax. It was still called IA (Imposto Automóvel), but 10% of the total tax income should be calculated regarding the car's CO2 emissions.

Next July (2007) this percentage will rise to 30%, and in January 2008 it should represent 60% of the total tax income. The tax name will change from IA to Imposto Sobre Veículos (ISV - Vehicle Tax).

Besides the rise of the environment component, the government decided that part of the tax should be transferred from buying to circulation.

Until now the income from circulation tax, called Imposto Municipal sobre Veículos (Vehicle City Tax), would go to the City where the vehicle was registered. The value of this tax is/was rather low. You can see the current rates here.

The tax due when buying a car (ISV) is expected to drop (average 10%), but the circulation tax, now called Imposto Único de Circulação (IUC - Unique Circulation Tax), payable every year, will rise substantially (average 300-500%). You can see the future rates here (ISV) and here (IUC).

Cars registered before July 2007 will pay IUC according to the current values forever. Cars registered after July 2007 will pay the new values.

Used vehicles imported from any Country pay ISV. When imported from an European Union Country there is a discount given based on age, the older the bigger discount. Starting July imported used vehicles will pay exactly the same IUC that new vehicles pay. This is an "effort" of the government to reduce the import of used vehicles (much more cheaper than new vehicles). You can see the discount percentages here.

If you're moving to Portugal, and you want to bring your car along, you're exempt from ISV. There are three conditions that you must meet to be exempt:
- you must be over 18 years old and have a driver's license for more than 12 months
- you must provide documentation that proves that you were a resident in another country for at least 12 months (a declaration from an official entity - such as an embassy, and some house bills/receipts or income/tax/social security documents)
- you can't sell the car for at least 12 months after portuguese registration

You'll have to visit personally the portuguese customs (Alfândega) and explain your intents. You can find Alfandega's several addresses here.

Sorry, but due to some time restrains, I'm not able to answer any further questions.

30.05.2007. 00:30

FD em 18.01.2008. 12:20

For what I'm aware, there will be no notice for payment sent to your address. You'll have to take initiative to pay the tax by yourself.

Since January 1st 2008, the tax stamp ceased to exist. Replacing it, you'll need to have two "documents" in your car: DUC (Documento Único de Cobrança) - the sheet of paper that you print in your computer with the information about your car and the payment methods available (obtained from http://www.e-financas.gov.pt), and the receipt of that payment (from the ATM - Multibanco, Correios, Bank, etc.).

If you prefer, you can pay directly at any Finanças service, be sure to take with you the car documents and your Número de Contribuinte.

Christine Vincent em 18.01.2008. 12:05

Many English and Portuguese people I have spoken to did not know of the new road tax rules. Will people receive notification that the car tax system has changed or a letter to remind them to pay the new tax in the month of their car registration?
Do you still get a road tax stamp?

FD em 14.01.2008. 14:40

I don't quite understand what you mean with pro-rata in this case, but yes, you'll have to pay it during March.

The tax is due for a full fiscal year, but it's only payable in that period.

Ann Denton em 11.01.2008. 19:55

Regarding the new road tax rules, our car was first registered in March 2003. Will we have to pay this coming March (we have paid one year's tax in July 2007) and will it be a pro-rata charge in the first instance?

FD em 11.01.2008. 10:10

Thanks. :)

The law, as strange as it may seem, doesn't set a time limit for a ISV exempt request when you move to Portugal.

Nonetheless, you say you'll be here for at least two more years. Are you on a time limited mission or something equivalent? In that case you don't even need to change the license plates to drive in Portugal. You can benefit from a special condition called "Admissão e importação temporária" (admission and temporary import).

Whenever someone moves to Portugal for a time limited mission, be it a job, studies or something alike, all you need is to prove that you'll be here for a determined period and that you'll return to your country. Is this the case?

J. F. em 10.01.2008. 11:58

Hi,

I have a car I bougth a couple of years ago, and later I moved to Portugal. I have been living and working in Portugal for two years, and I will be here at least for two more years. When I first moved, I did not need a car in Portugal, but now it can be useful. Can I still take it to Portugal and avoid paying the ISV? In principle I fullfil the requirements displayed above:
- I have lived in other country my whole life before moving to portugal (more than 12 months), but I have been living in Portugal the last 2 years.
- I have more than 12 months of driving experience and I am above 18.
- I am not selling my car for a long time.

Do I have to go to Alfândega and ask there? Which documents should I take with me?

Thanks, and congratulations for the nice site.

FD em 01.08.2007. 18:18

You should've payed the tax between 1st June and 31st July.

As of now, you must go to a tax office (Finanças) near you and pay the tax. Take with you your "número de contribuinte" and the car's documentation (DUA - documento único automóvel). To pay at the tax office choose the "Tesouraria" queue.

George em 01.08.2007. 17:24

I bought my 1999 used passenger vehicle in August 2006. The dealer said that my registration was current. I have a "06" for the year on the IUC stamp. It is now August 1st. Some of the information I've looked at mentions a July 31st cutoff for paying the annual tax. What do I need to do to make this current, if anything?

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