At issue was the ISV (Vehicle Tax) relating to second hand imported cars that had seen the Portuguese tax authorities igmoring rules imposed on the country by the European Union. The issue has already been taken to the European Court of Justice (ECJ), on the initiative of the European Commission. This situation led the government to change the rules.

Accordingto the state budget, an environmental component reduction factor was introduced, relating to the age of the vehicle, which should reduce the final tax to be paid by those who choose to import second-hand vehicles from the European Union.

The ISV has two components, one regarding cylinder capacity and another with the environmental component. However, under the Portuguese law that was previously in force, the reduction due to age only affects the cylinder capacity component, leaving out the environmental component. This causes the final price to increase at times, which leads to increases much higher than the effective market value and strongly affects imports.

Therefore, above all, it causes cars coming from other European countries to be given unequal treatment, which violates European treaties. So, these cars that paid for the 100 percent environmental component, as if they were new cars, were reducing the number of people who wanted to buy a second hand car from another UE’s countries, as expected.

The introduction of this reduction in ISV in the environmental component is the Government’s response to the condemnation by Brussels, which accused the country of discriminating against vehicles imported from other European countries. Because of that, several taxpayers have applied to the courts to be reimbursed for the amounts paid in the import of these cars, almost all of them won the respective lawsuits.

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