# Portugal automotive taxation and incentive reforms

> Live situation record from CLSTR: https://clstr.news/situations/portugal-automotive-taxation-and-incentive-reforms
> Updated: 2026-10-08T15:51:22.000Z. Sources: 6. Developments: 2.

Portugal is considering structural changes to automotive taxation and incentives to support transport decarbonization.

The Portuguese Automobile Association (ACAP) has proposed a plan to phase out the Vehicle Tax (ISV) by 2036 through a cumulative annual reduction of 10%. To offset revenue losses, the proposal suggests increasing the Single Circulation Tax (IUC) and shifting taxation criteria toward environmental factors like CO2 emissions and fuel type.

Concurrently, the government’s 2027 State Budget proposal includes new incentives for acquiring zero-emission vehicles. While specific subsidy amounts and eligibility rules for the 2027 cycle have not yet been detailed, the initiative follows previous programs that provided up to 4,000 euros for electric passenger vehicles. The budget proposal is scheduled for debate in late October, with a final vote expected in late November.

## Timeline

### 2026-10-08: Portugal proposes new electric vehicle incentives for 2027

Portugal's 2027 State Budget proposal includes new incentives for zero-emission vehicles to promote electric mobility, though specific subsidy amounts and rules have yet to be defined.

4 sources. https://clstr.news/cluster/portugal-proposes-new-electric-vehicle-incentives-for-2027

### 2026-10-05: Portugal vehicle tax reform proposal aims to phase out ISV by 2036

The Portuguese Automobile Association proposes phasing out the Vehicle Tax (ISV) by 2036, replacing revenue through increased Single Circulation Tax (IUC) and environmental-based criteria.

2 sources. https://clstr.news/cluster/portugal-vehicle-tax-reform-proposal-aims-to-phase-out-isv-by-2036

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Cite as: Portugal automotive taxation and incentive reforms. CLSTR, https://clstr.news/situations/portugal-automotive-taxation-and-incentive-reforms