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Taxes on the purchase and use of the car will remain unchanged in 2021. The Government froze the ISV – Tax on Vehicles – and also the IUC – Single Circulation Tax – also known as the old ‘car stamp’, according to the report of the State Budget for 2021 (OE2021), delivered this Monday to Parliament.
The Government says that these taxes provide a “relatively stable” tax collection compared to 2020, although without indicating the amount of that collection.
Until September, car sales in Portugal fell by 38.4%, to 127,168 units, due to the effects of the new coronavirus.
The big change in ISV turns out to be the inclusion of a discount on the environmental component for used vehicles imported from the European Union, confirming the indication given in the preliminary version of OE2021.
The Portuguese state has been fighting a duel with the European Commission over the ISV of imported used vehicles. In January 2019, Brussels launched an infringement procedure against Portugal for “failing to take into account the environmental component of the registration tax applicable to used vehicles imported from other Member States for depreciation purposes”.
In November last year, the European Commission stepped up pressure on Portugal and issued a reasoned opinion. As Portugal did nothing, in February this year the case reached the Court of Justice of the European Union.
Still in the automotive area, the Government will maintain the incentive program for the purchase of electric vehicles, such as cars, bicycles, motorcycles and mopeds. Funded by the Environment Fund, this program has an estimated budget of 4 million euros.
The possible reintroduction of a program to support the scrapping of motor vehicles, a measure demanded for a long time by this industry to reduce the age of the circulating fleet in Portugal, was put aside. On average, each car in Portugal is 12.7 years old, according to data from ACAP – Associação Automóvel de Portugal.
