This decision comes after the country was forced to correct the ISV calculation for imported second-hand vehicles, but irregularities still persist.

According to Pplware, ISV is a registration tax that is levied on the acquisition of motor vehicles and is paid when the vehicle is registered in the country, whether it is new or used.

The recent controversy involved a citizen who, in 2021, sought to register a plug-in hybrid car with German registration dated 2018. The Portuguese Customs Authority, at the time, insisted on applying the full tax rate on the imported vehicle. However, the European Court of Justice ruled in favour of the citizen, considering that Portugal was violating Community law by improperly calculating the ISV on used vehicles registered in other Member States.

The court's decision highlighted that “Member States may not impose new taxes or introduce changes to existing taxes that have the purpose or effect of discouraging the sale of imported products to the benefit of the sale of similar products available on the national market”. This prohibition applies especially to products introduced on the national market before taxes or modifications came into force.

The ISV, which replaced the old Car Tax in 2007, is a registration tax applied once, being paid when a vehicle is registered for the first time in Portugal.

This episode highlights the ongoing challenges in fairly applying taxes on imported vehicles, with the court reinforcing the need for compliance with European Union laws and regulations in this matter.