After the European Union allowed a reduced VAT rate for bicycles, Portugal becomes the first member state to take advantage of this reduction.
New Year, lower VAT for bicycles. Portugal now applies the reduced VAT rate (6%) for the purchase and repair of bicyclesThis is the result of the approval of an amendment proposal to the State Budget for 2023 (OE 2023). Measure was published in Diário da República at the end of last year and is already in effect.
Portugal is the first country in the European Union (EU) to lower the VAT rate on the purchase and repair of bicycles - which includes electric bikes and cargo bikes, of course -, according to the European Cyclists' Federation (ECF). The reduction of the so-called value-added tax on bicycles from 23 to 6% is possible because the EU approved about a year ago the application of the reduced rate on this type of product, with the objective of aligning VAT with climate targets.
For the 2022 State Budget, Livre had already proposed 6% VAT for bicycles, together with BE, the Liberal Initiative and PAN, but the measure just for being rejected and not being incorporated in the final budget. "It is not enough for Portugal to want to join the front ranks of the developed countries when it comes to reducing fossil fuel consumption, population health, and mobility in public spaces: to do so, it must adopt measures that put it in the front rank.Free wrote in proposal for amendment that has now been presented within the scope of the State Budget 2023. For Rui Tavares' party, the following are important "measures that encourage a paradigm shift from car to bicycle"and the VAT reduction is "a step that, while modest, is nonetheless essential.
Lower VAT for bicycles can allow consumers to save about 300 euros when buying a bicycle that previously would have cost 2000 euros. However, it is necessary that manufacturers and stores apply the VAT reduction in prices and do not assume the difference in values as additional revenue. In an online survey, Lisboa Para Pessoas found that Decathlon has not changed the prices of the bicycles it sells online; its cargo bike Elops R500E, for example, still costs 2800 Euros, when it should have cost around 2300 Euros. The Portuguese BEEQ also maintained the prices on its website. Who reduced the prices was the brand Canyon or the bicycle store Naturmotorin Montijo.
VAT of 6% for bicycles was advocated by industry associations such as MUBi, a Portuguese Federation of Cycletourism and Bicycle Users (FPCUB) and also the ABIMOTAwhich represents the bicycle industry in Portugal. In addition to the lowering of value-added tax, Portugal also approved the continued support for the purchase of bicycles, conventional and electric, and also cargo bicycles in this 2023 through the Environmental Fund. The launch of these supports should be relaunched soon.
