Portuguese taxes on cars

In this page you´ll find a brief introduction to portuguese vehicle taxes.
Summary: there are two taxes, ISV, paid when a license plate is delivered and, IUC, paid annually for possessing a vehicle.

Tax principle and some history

In Portugal, cars - and other vehicles such as motorcycles, boats or airplanes - pay essentially two taxes.

One, called Imposto Sobre Veículos or ISV (Vehicle Tax), is paid only once when the vehicle gets a portuguese license plate.

The other, called Imposto Único de Circulação or IUC (Circulation Unique Tax), is paid yearly, for having a (circulation) license plate.

These taxes were implemented in July 2007, replacing "Imposto Automóvel" and "Imposto Municipal sobre Veículos", respectively.
Previously, the vehicle tax ratio was focused on acquisition rather than property.
With the 2007 vehicle tax reform, tax revenue was evenly distributed between property and acquisition, to spread the tax revenue influx, reducing severe impact from highs and lows in the automotive market.

In Portugal, there are no taxes when you buy an used car - you`ll only pay the registration fee.
There are no regional taxes too.

How ISV works

The ISV for common passenger cars is calculated considering two facts: engine cubic capacity (displacement) and CO2 emissions.
Both are declared by the manufacturer through a document called Certificate of Conformity or by the Department of Vehicles` (IMT or Instituto da Mobilidade e dos Transportes) Homologation.

The math goes like this:

(engine cc * tax per cc - fixed dedutible amount)
+
(CO2 g/km * tax per g/km - fixed dedutible amount)
.

There are three tax brackets for engine displacement and six tax brackets for CO2 emissions.
The purpose of these brackets is to charge significantly more tax if the vehicle has more cc or emits more CO2. The government official version is that ISV tries to tax the most polluting vehicles.

More about this: ISV tax rate tables (in portuguese).

There are several tax reductions for several types of vehicles or owners.
If you`re moving to Portugal and you bring your car with you, you can be exempt from ISV.

Some vehicles` tax calculation doesn`t consider CO2 emissions.
Hybrid or plug-in cars have a discount, electric cars don`t pay any ISV.
There is a 500€ surcharge for diesel vehicles that emit more than 0,002g/km of particles (meaning, all diesel cars without diesel particulate filter - DPF).
Other tax breaks include cabs and car rental companies. The state itself and several other private institutions or individuals (firefighters, solidarity associations, persons with disabilities, diplomatic or UE staff) don`t pay any ISV on all or some vehicles.

More about this: ISV Legislation (in portuguese).

ISV is owed for new and used vehicles. Used vehicles imported from an UE country benefit from an age discount, between 10% (up to 1 year) and 80% (more than 10 years), but only for the engine displacement tax component. Any imported used vehicle pays the CO2 tax component as if it was new - there`s no age discount.
Used vehicles imported from any other country (Switzerland or the USA for example) don`t get any age discount on ISV and also have to pay 23% VAT (IVA), on top of any other customs duty, which range from 0% to 10%.

More about this: ISV calculator for UE imported cars and non-UE (in portuguese).

In general, ISV lets us be one of the leading countries in low car CO2 emissions. In everyday life, we have an underpowered car fleet. Cars with between 1.0 (gasoline) and 1.6 liters (diesel) of engine displacement represent the major share of cars sold.
We pay something like 500€~1.500€ of ISV for gasoline vehicles and 2.000€~4.000€ for diesel vehicles. Contrary to what these numbers may suggest, we are a diesel nation - fuel tax (ISP) is heavier on gasoline than on diesel and, corporate tax laws give more tax deductions to diesel than to gasoline.

How IUC works

IUC, the yearly tax, is based on the same principles. More cc, more CO2, more tax to pay.
Yet, there is a major difference between two classes of vehicles. Those that were registered before July 2007, benefit from a very low tax, because IUC was implemented on that date.
Previous to IUC, average cars used to pay a yearly tax of just 10€~50€.
After IUC was implemented, this yearly tax was increased to an average of 100€~300€. The most polluting vehicles, diesel +2.500cm3 and +250g/km CO2 pay something like 1.000€ every year.
When buying or importing a car, consider those that have a low engine displacement and low CO2 emissions.

More about this: IUC tax rates tables (in portuguese).

IUC is payable up to the end of the month of the license plate.
Example: if a car gets its license plate on 8th March 2017, one must pay IUC until 31st March in any given year. Nonetheless, although IUC is due yearly, only its payment is distributed along the year, to avoid payment peaks or last minute rushes.

There is no longer a "tax paid stamp" that you need to stick in the car. The police and transit authorities don´t have any legal grounds to require any proof that the tax was paid. If you pay or not, it´s only a matter of business between you and Autoridade Tributária (Tax Authority). However, Autoridade Tributária can and will issue a mandate to apprehend any car that is past due on IUC.

More about this: IUC FAQ (Frequently Asked Questions) (in portuguese).

The tax is calculated considering the same figures of ISV calculation: engine cc and CO2 emissions. There are two tax tables, one for each figure. Then, there is a coefficient factor to penalize younger cars. From 2017 there is also a new additional surtax for cars with more than 180g/km of CO2 emissions.
Diesel cars also pay a surtax. This surtax was meant to be temporary but, until now, it prevails.

More about this: IUC calculator (in portuguese).

There are tax breaks for some persons (disabled) or entities (state vehicles, solidarity associations, etc.).

The IUC tax is due until one cancels the vehicle`s license plate, meaning, it´s a tax for life.

More about this: IUC Legislation (in portuguese).

There is a common confusion among imported used cars regarding IUC. The tax is payable, as mentioned above, until the end of the license plate´s month.
But, some years ago, because we were importing too many used cars from UE countries (Germany mainly), there were concerns that these vehicles didn´t match the wanted vehicle profile that Portugal was supposed to have. Let´s say it another way: we were importing too much junk. So, the government changed our license plates layout to add a yellow side strip that mentions the month and year of the first license plate of the car, be it portuguese or not.
So, today, we have a tax that´s payable until the end of the portuguese license plate´s month but, in the physical license plate, the one that you find in the car, you can have a completely different month.
Moreover, you can have a 2005 car, that was imported in 2010, that will be paying IUC as a portuguese 2010 car (the tax´s higher), and not a 2005 car, because the IUC is payable according only to the portuguese license plate.
The only place where you can check the portuguese licence plate date is in the DUA (Documento Único Automóvel - we have some affection for initials), the vehicle registration certificate.

Yet, the confusion´s not over. The national vehicles registry database is the one used by the "Autoridade Tributária" (Tax Authority) to notify owners and collect IUC.
Up until the tax reform, this database was a mess because there was no proper incentive or penalty to update it. Cars would exchange hands and the registry wouldn´t be updated because it would cost money, cars were scrapped and the license plate wasn´t cancelled because it would cost money. It was cheaper to avoid any new registry. So, from 2007 to today, owners that are no longer owners are getting tax notifications to pay, for vehicles that they don´t have for years.

Further reading

If you need any further information, please feel free to ask using the comment box below.
I`m not a native english speaker, if my english isn`t quite there, please do correct me, I`ll be grateful if you do.
If you want to translate this article to your native language, post your translation in the comment box bellow and I`ll add a new page to this site with your translation - with credits to you.

18.12.2017. 14:20

FD em 12.02.2008. 09:20

No. You must own the car that you want to bring to Portugal for at least 12 months as you were told at the Alfândega. Sadly, there's nothing that you can do to avoid the tax.

KK em 08.02.2008. 13:59

I have bought a new car in my country (European Union) in December 2007, and for personal reasons now moved to Portugal (forever), so the car is like 3 months old. I got to know from Alfandega that i need to have the car in my country for at least 12 months in order to be excluded from the tax. Is it still possible for me to avoid this tax or not really ?

Thanks!

FD em 31.01.2008. 11:58

In the new law there were some transitional articles, and among them the issue that you bring here was one.

The law became valid July 1st, but regarding the exemption due when a citizen transfers his residence to Portugal, in which the vehicle should be his for at least 6 months, the new period, of 12 months, only became valid January 1st.

So, if your friend transferred his residence to Portugal and began the registration/legalization process up to December 2007, he would be required to have his car for at least 6 month. But, if he began the legalization/registration process in January 2008 the time required was no longer 6 month but 12 month.

I think I was clear, if not please say so. :)

R van der Heijden em 30.01.2008. 14:30

Dear FD, reply to your answer 30.01.2008 11:02

"If you could contextualize your question I could be more useful"

Ok, to be more specific. My friend started the import of his car somewhere between August 2007 and January 2008. At that moment he was told that the car had to be registered at his name for at least 6 month in the country of origin. Now (January 2008), áfter finishing the proces, he has been told that he has to pay the ISV (€ 10.000 !) because the new law on the ISV already was validated in July 2007 instead of January 2008.

FD em 30.01.2008. 11:02

Reply to R van der Heijden on 28.01.2008. 23:24:

The law comprises two different taxes: the ISV and the IUC. The ISV is payable upon the first registration/licensing. The IUC is payable every year.

In July 2007, the law (both ISV and IUC) became valid to every vehicle registered from that moment forward. In January 2008, the law, comprising only IUC, became valid to all vehicles, including those registered before July 2007.

If you could contextualize your question I could be more useful.

FD em 30.01.2008. 10:46

Reply to John Fripp on 28.01.2008. 21:49:

These were the intentions behind the new system:

- reduce the load on the tax system caused by paying in a specific period of the year: the queues at the tax offices were huge and the computer network was overloaded becoming many times unusable
- transfer the responsibility of tax supervision from the police authorities to the Ministério das Finanças (Ministry of Finances)
- by basing it on property and not on circulation it's much easier to find out who isn't paying, therefore, on site tax supervision (on the road) is almost not needed

So, with this new system, it's the understanding of the government that the police function is to watch for our safety and not to check if we pay or we don't pay our taxes. That's a job for the tax collectors, the Ministério das Finanças (Ministry of Finances), not for the police. Nonetheless, police authorities can continue to monitor tax payment on the road.

R van der Heijden em 28.01.2008. 23:24

Dear FD,

As a reply on your answer off 21.01.2008. 11:23 the following question.

Today a Dutch friend of mine was told that he had to pay the ISV because the law on the ISV already has been changed in June 2007 and not in January 2008 !.
Please advise me on this and, very important, something I can refer to if it turned out to be that the information that has been given to him, is not correct.

John Fripp em 28.01.2008. 21:49

As a retired British police officer living in Portugal, I was impressed by the old system of paying vehicle tax. There was no doubt as to the legality of a car with regard to documentation, the vehicle tax, insurance cover and MOT were all displayed in the windscreen. The vehicle tax was uniform, as all vehicles had to be taxed between 1 June and 31 July and the annual tax stamp was there for all to see. I cannot see any advantage with regard to the new system introduced on 01.01.2008, can you explain the thought behind this new system, the GNR and Traffic police must be pulling their hair out as they no longer can make an easy check of parked vehicles that are unattended

FD em 25.01.2008. 09:40

If the car is left in Portugal for more than 183 days in each year, you have to register it (legalização). This procedure has a cost that depends on your car's engine displacement (cc/cm3), CO2 emissions and age.

Furthermore, you'll have to pay IUC, the annual tax.

You can do a simulation of how much you'd pay here:
https://impostosobreveiculos.info/isv/simulador-isv/simulador-online-isv-20072008-importados-usados/

For your convenience:
Gasolina = Petrol/Unleaded
Gasóleo = Diesel

Where you see "Mais de 1 a 2 anos (1 ano e 1 dia a exactamente 2 anos)" it translates as: More than 1 to 2 years (1 year and 1 day to exactly 2 years).

The total amount to pay is seen bellow at "Total Impostos (ISV+IVA caso aplicável)", consider the second column value, the first one was for 2007. Below, "Imposto Único de Circulação" is the value of the annual tax.

To register it you'll have to go to 3 different offices, Centro de Inspecção (the same procedure as UK's MOT), Alfândega/DGAIEC (customs) and IMTT (UK's DVLA).

I think it is best for you to contract a "Agência de Documentação" as the task may be daunting at some point. You can search for one here: https://yellowpages.pai.pt/ (Yellow Pages).

Documents: original vehicle registration certificate and or other document that clearly states the vehicle's mechanical characteristics and the owner, and in some cases the COC (Certificate of Conformity) or UK's Homologation Sheet.

Steve Salter em 24.01.2008. 08:13

I own a holiday home in the Algarve,I would like to bring one of my cars from the UK for use when I am there,it would be left in Portugal.Do I have to register this car in Portugal?How do I pay the tax?What documents do I need?

FD em 21.01.2008. 11:23

The six month period was valid in the previous law. In this new law (and since January 1st 2008) it was updated to twelve months.

So yes, if you want to be exempt from ISV when moving to Portugal your car must be registered in your name for at least twelve months.

My portuguese is better than my english. :D

R van der Heijden em 19.01.2008. 12:06

As far as I know one need to prove that the vehicle to be imported into Portugal must have been registered at your name at least for six months in the country of origin. This to get an exempt for the ISV.
Now I have heard rumours that this period has been changed to 12 months.

Is that true or is it just a rumour ?

By the way I'm not a native speaker. I'm Dutch but at the moment my English is better than my Portuguese ;-)

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 https://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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