Changes to the IUC confirmed: new regime will only come into effect in 2027

After months of debate and some uncertainty surrounding the dates and the implementation model, a final decision has now been reached: the law governing the Single Circulation Tax (IUC) has been amended, but the new regime will only come into force in 2027. The aim is to simplify tax payments, reduce oversights and avoid the thousands of fines imposed on Portuguese drivers every year.

The proposal, approved by the Council of Ministers of the Government of Portugal and subsequently agreed upon, does not change the amount of tax payable. The changes focus solely on who pays, when payment is made and how it can be made, making the process more predictable and better suited to the reality of families.

So, who pays, when and how?

Currently, the IUC must be paid in the month of the vehicle’s registration, a model that has led to millions of administrative offence proceedings due to simple forgetfulness. According to official data, since 2020 around 5.6 million cases have been initiated for non-payment or late payment, along with 1.8 million tax enforcement proceedings, figures that help explain the need for change.

Under the new regime, the IUC will be payable by whoever owns the vehicle on 1 January of each year, with payment concentrated in the month of April. In addition, it will be possible to split the tax into instalments, depending on the amount due. For amounts of up to €100, payment will be made in a single instalment in April. For amounts between €100 and €500, the tax may be paid in two instalments, in April and October. For amounts above €500, payment will be split into three instalments, in April, July and October.

This solution aims to ease the financial burden, especially for those who own more than one vehicle, while at the same time reducing unnecessary penalties. It is important to stress that there is no increase in the IUC; this is merely a reorganisation of the payment schedule and method.

Transitional regime

To avoid unfair situations where taxpayers would face double payments within a short period, a transitional regime has also been defined for 2027. In that year, taxpayers with an IUC of up to €500 will pay a single instalment in October, while amounts above that threshold will be paid in two instalments, in July and October.

With this change, the Government aims to promote greater fairness, predictability and voluntary compliance with tax obligations, without penalising taxpayers for administrative errors or oversights. For motorists, the message is clear: changes are on the way, but there is still enough time to adapt.

Source: Portal of the Government of Portugal (portugal.gov.pt)