Navigating the Import of UK Cars to Portugal Post-Brexit

The United Kingdom's departure from the European Union, commonly known as Brexit, has significantly altered the landscape for importing vehicles between the UK and Portugal. If you're a UK resident considering a move to Portugal, or simply looking to bring your beloved vehicle across the Channel, understanding these changes is paramount. This guide aims to demystify the process, focusing on the critical considerations that came into effect from January 1st, 2021, and offering practical advice for those still contemplating an import before the end of 2020.

The core issue revolves around the classification of the UK as a 'third territory' by the EU, which has direct implications for customs duties, Value Added Tax (VAT), and registration taxes. Previously, importing a car from the UK into Portugal was treated the same as importing from any other EU member state. However, this changed on January 1st, 2021. This shift means that vehicles imported from the UK are now subject to different tax structures and regulations compared to those from within the EU.

Brexit and the New Import Landscape

Prior to January 1st, 2021, any vehicle imported from the UK was considered to be coming from within EU territory. This meant that standard EU import procedures applied, which were generally more favourable. However, with the UK no longer being an EU member state, imports from the UK are now treated as coming from a 'third territory'. This change has substantial financial and administrative consequences for individuals looking to import their vehicles.

The primary impact of this classification is the application of Portuguese VAT (currently 23%) on all vehicle imports from the UK. Furthermore, the calculation of the ISV (Imposto sobre Veículos or Vehicle Registration Tax) has been significantly altered. For used cars imported from the UK after December 31st, 2020, there is no age deduction applied to the ISV. This means the tax is calculated as if the vehicle were new, regardless of its actual age or previous registration status.

Tax Implications: VAT and ISV

The financial burden of importing a car from the UK has increased considerably since Brexit. Here's a breakdown of the key taxes:

• VAT (Value Added Tax): A standard rate of 23% is now applicable to all vehicles imported from the UK.
• ISV (Vehicle Registration Tax): This tax is calculated based on factors such as engine capacity, CO2 emissions, and the vehicle's age. Crucially, for vehicles imported from the UK post-Brexit, the ISV calculation no longer benefits from age-related deductions. This means a used car imported from the UK will be taxed as if it were brand new, making it significantly more expensive.

The combined effect of these taxes means that, in most cases, it is no longer economically viable to import a standard passenger car from the UK to Portugal unless specific exemptions apply. The cost of taxes can often exceed the value of the vehicle itself.

The Exemption for Change of Residence

Fortunately, for individuals moving their permanent residence to Portugal, a significant exemption remains in place. If you are officially relocating your residence to Portugal, you can import one vehicle tax-free. This exemption applies regardless of whether the UK is still an EU member or not. However, it's crucial to understand the conditions and process for claiming this exemption:

• Proof of Residence: You will need to provide official documentation proving your change of residence, such as a Portuguese residency permit (CRUE) and proof of address.
• Ownership Period: Typically, you must have owned and used the vehicle in your country of origin (the UK) for at least 12 months prior to the date of import.
• Personal Use: The vehicle must be for your personal use and cannot be sold or transferred for at least 12 months after import.

Even with this exemption, there are still administrative steps involved, including obtaining a Certificate of Conformity and undergoing a vehicle inspection in Portugal. It is advisable to consult with the Portuguese customs authorities or a professional import agent for the most up-to-date requirements regarding this exemption.

IUC (Imposto Único de Circulação) - The Annual Road Tax

The calculation of the annual road tax, the IUC, has also raised questions for vehicles imported from the UK, particularly those registered before Brexit.

According to Portuguese law, the IUC calculation for vehicles registered in EU or EEA member states since 1981 is based on their initial registration date. However, the ambiguity arises for vehicles imported from the UK post-2021. The crucial question is whether the IUC calculation will consider the UK's status at the time of the vehicle's first registration (when it was in the EU) or at the time of its import into Portugal (when the UK is a third territory).

Based on a common interpretation of the law, it is likely that the situation of the country at the time of importation will be considered. This means that vehicles imported from the UK after 2021, even if they were first registered in the UK while it was an EU member, may be subject to IUC calculations as if they were imported from a non-EU country. This could lead to less favourable tax treatment compared to vehicles originally registered within the EU.

This is particularly relevant for those who might benefit from the change of residence exemption. While the import duty and VAT might be waived, the subsequent IUC calculation could still reflect the UK's 'third territory' status. This is similar to the situation with vehicles imported from Switzerland, which is also not an EU member.

Table: Pre- vs. Post-Brexit Import Considerations

Practical Considerations: Right-Hand Drive

Beyond the tax and registration hurdles, there's a fundamental practical issue for UK car owners: the steering wheel placement. Portugal, like most of continental Europe, drives on the right-hand side of the road. UK cars have the steering wheel on the right.

While it is possible to drive a right-hand drive vehicle in Portugal, there are several factors to consider:

• Visibility: Overtaking and navigating junctions can be more challenging and potentially dangerous.
• Headlights: UK headlights are designed to illuminate the left side of the road. For driving in Portugal, they will need to be adjusted or replaced to avoid dazzling oncoming drivers and to ensure proper illumination of the road ahead. This typically involves fitting 'beam benders' or having the headlights professionally adjusted.
• Resale Value: A right-hand drive car will have a significantly lower resale value in Portugal compared to a left-hand drive equivalent. The market for such vehicles is very limited, and you may struggle to sell it at all.

These factors, combined with the increased import costs, further reinforce the advice to reconsider importing a right-hand drive UK car to Portugal, especially for regular use.

Recommendation: Act Before the Deadline

Given the significant changes that took effect on January 1st, 2021, the advice for anyone still considering importing a car from the UK is clear: do it before the end of 2020. If you can complete the import process while the UK is still considered part of the EU, you will avoid the substantial additional taxes and administrative complexities.

For those who missed the deadline or are planning to move after it, the primary route to importing a vehicle from the UK without prohibitive costs is through the change of residence exemption. Even then, it's essential to be aware of potential future IUC implications and the practicalities of driving a right-hand drive vehicle.

For vehicles other than passenger cars, such as motorcycles, the economic impact might be less severe, and the change of residence exemption could still be a viable option.

Frequently Asked Questions

Can I drive my UK car in Portugal after Brexit?

Yes, you can drive your UK-registered car in Portugal for a limited period as a visitor. However, if you intend to reside in Portugal, you will eventually need to register your vehicle there and comply with Portuguese regulations, including potential import taxes if not exempt.

What are the main tax changes for importing a UK car to Portugal post-Brexit?

The main changes are the application of 23% VAT and the removal of age deductions when calculating the ISV (Vehicle Registration Tax), effectively taxing used cars as if they were new.

Is there any way to import a used car from the UK without paying high taxes?

The primary exemption is for individuals moving their permanent residence to Portugal. You can import one vehicle tax-free under specific conditions, including proving your change of residence and having owned the car for at least 12 months.

Do I need to change my UK car's headlights for Portugal?

Yes, UK headlights dip to the left. For driving on the right-hand side of the road in Portugal, you will need to adjust your headlights to dip to the right to avoid dazzling oncoming traffic. This can be done with conversion stickers or professional adjustment.

Will my UK driving licence be valid in Portugal?

As a visitor, your UK driving licence is valid. If you become a resident, you may need to exchange your licence for a Portuguese one, depending on agreements in place. Currently, UK licences are generally accepted for residents for a period, but checking with the relevant Portuguese authorities is recommended.

In conclusion, the process of importing a UK car into Portugal has become considerably more complex and expensive since Brexit. While exceptions exist, particularly for those relocating permanently, careful planning and an understanding of the new regulations are essential. For most individuals, the financial and practical challenges associated with importing a standard passenger car from the UK after December 31st, 2020, make it an unviable option.

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