Portuguese consumers will now be able to buy bicycles at the lowest VAT rate of 6% starting from 1 January 2023. The savings potential is important: for the purchase of an e-bike costing €2,000 under the current standard VAT rate, consumers would save almost €300 (under the assumption that manufacturers and outlets fully pass on the reduction).
The amendment to the 2023 state budget was justified specifically with the goal that is inscribed in the Portuguese national cycling strategy of reaching a cycling modal share of 4% by 2025 and 10% by 2030. The explanatory text states: “Such an ambition, essential for the protection of the environment, the reduction of fossil fuel consumption, people’s health and economy and the quality of life in and around cities, naturally requires measures that stimulate the paradigm shift from car to bicycle.”
On December 7th 2021 the Council of the EU revealed a “modernised” VAT directive that considered the rates applicable across a range of goods. As a result, consumers across the EU benefited from a reduction on the price of their bicycles and electric bikes thanks to a significant piece of policy reform trimming the VAT to be paid.