ISV and IUC: What’s the difference and how to calculate?
If you are planning to import a car from Germany or other countries to Portugal, you will encounter two important taxes: ISV (Imposto Sobre Veículos) and IUC (Imposto Único Circulação). In this guide, the BitMotors team will explain in detail how these taxes are calculated, what factors influence them, and in which cases you may be exempt from paying them.
ISV and IUC: What’s the difference?
Once your vehicle arrives in Portugal and all customs documents are submitted through the Finanças online portal, you will receive a DUC (Documento Único de Cobrança), which specifies the import duty amount, known as ISV (Imposto Sobre Veículos). After paying it, your vehicle will be assigned Portuguese license plates, and you can start using it in Portugal. In the future, you will have to pay an annual tax called IUC (Imposto Único Circulação) on your car.
Thus, ISV is the import duty for bringing a car into Portugal, while IUC is an annual tax for using the vehicle. Now, let’s examine in detail how both taxes are calculated.
How is ISV calculated?
The ISV tax amount depends on various factors, including the country of origin, age of the car, fuel type, and CO₂ emissions. Let’s take a closer look at the key aspects:
Country of import
If a car is imported from a non-EU country, the ISV tax is applied at full rate without any discounts based on the vehicle’s age. This makes importing such vehicles significantly more expensive compared to those from EU countries.
Year and month of manufacture
The ISV tax decreases as the vehicle ages. The exact month and year of manufacture are taken into account—even a single day matters. For example, if a vehicle was produced in March 2023, it will reach two years of age on March 2, 2025, which affects the tax rate. Vehicles manufactured before 1970 receive additional tax benefits.
Fuel type
Fuel type plays a significant role in ISV calculation. Petrol and diesel cars are taxed at full rates. Hybrid cars with an electric range exceeding 50 km and CO₂ emissions below 50 g/km can receive a 40% discount. Plug-in hybrids with a range of more than 25 km can get a 75% discount. Fully electric vehicles are exempt from ISV.
Engine displacement
The ISV tax rate is directly linked to engine displacement. Cars with smaller engines are taxed at lower rates.
There are three main categories:
▪️ Up to 1000 cm³ – lowest tax rate;
▪️ 1001 to 1250 cm³ – mid-range tax rate;
▪️ Over 1250 cm³ – highest tax rate.
CO₂ emissions
CO₂ emissions play a crucial role in ISV calculation: the lower the emissions, the lower the tax. Depending on the vehicle’s year of production, the calculation may be based on either the old NEDC standard or the newer WLTP standard.
Real ISV calculation example
Recently, we imported a Volkswagen Passat GTE for one of our clients. This is a petrol plug-in hybrid with a 1.4-liter engine. The initial ISV rate for such a car was €1,631.07, but thanks to its PHEV status and an electric range of over 25 km, a 75% discount was applied, reducing the tax to €399.98. Additional discounts for vehicle age and low CO₂ emissions further reduced the final tax to €224.64 — significantly lower than the original rate.
How is IUC calculated?
After paying ISV, you will need to pay an annual road tax called IUC.
The amount of this tax depends on the following factors:
▪️ Country of vehicle import;
▪️ Date of first registration;
▪️ Fuel type;
▪️ Engine displacement;
▪️ CO₂ emissions.
For most petrol vehicles with an engine displacement above 1,251 cm³ and CO₂ emissions below 140 g/km, manufactured between 2017 and 2025, the IUC tax will be €148.22. For diesel vehicles with the same characteristics, the tax will be €10.07 higher. It is also worth noting that electric vehicles and those first registered in the EU before 1981 are exempt from IUC.
Conclusion
In this article, we have thoroughly explained the differences between ISV and IUC, the factors that affect their calculation, and the costs associated with importing a car to Portugal.
We hope this guide helps you better understand Portugal’s car tax system. However, if you want to save time and money, the BitMotors team is here to help! We not only select and import cars from Germany but also calculate all taxes in advance to minimize costs. Submit your request today and receive a complete cost estimate!