Taxation: Commission refers Portugal to the Court for discriminatory legislation on car registration tax

lisbon

(Rossio, Lisbon, Portugal, Unsplash)

This article is brought to you in association with the European Commission.


Today the Commission decided to refer Portugal to the Court of Justice of the European Union for taxing used cars that are imported from other Member States more heavily than used cars purchased on the Portuguese market.

Under EU rules, no Member State can impose internal taxation of any kind – whether directly or indirectly – on the products of other Member States in excess of that imposed directly or indirectly on similar domestic products.

The Portuguese legislation in question does not fully take into account the depreciation of cars imported from other Member States and is, therefore, not compatible with Article 110 TFEU. The European Court of Justice already concluded on 16 June 2016 (Judgment C-200/15) that a previous version of this Portuguese tax was contrary to EU law.

The decision to refer the matter to the Court follows Portugal’s failure to bring its legislation into line with EU law following the Commission’s reasoned opinion.

Background

The European Commission sent a letter of formal notice on 24 January 2019, followed by a reasoned opinion on 27 November 2019. Since Portugal has not yet complied, the Commission is now bringing the matter before the Court of Justice of the European Union.

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