Selling a car does not always end all problems with the IRS. In some cases, the former owner continues to receive notifications to pay the Single Circulation Tax, known as IUC, because the vehicle still appears registered in their name.
A recent decision by the Supreme Administrative Court clarified this situation. According to , the court decided that, when it is possible to prove who the real owner of the vehicle is, it is that person who must bear the tax.
Car registration doesn’t solve everything
The case is particularly relevant to situations where a car was sold but the change of ownership was not reflected in the car registration in a timely manner. Until now, the Federal Revenue Service tended to look at the name on the register to demand payment of IUC. The IUC Code provides that the tax is levied on people in whose name the ownership of vehicles is registered. However, the Supreme Administrative Court understood that this rule cannot be applied automatically when there is proof that the effective owner is another person.
In Ruling No. 5/2026, published in the Diário da República, the Supreme Court concludes that the incidence of IUC is based on a presumption of ownership arising from vehicle registration, but that this presumption can be rebutted by proof to the contrary.
Former owner can waive the charge
In practice, this means that the owner registered in the vehicle register can demonstrate that he was no longer the true owner of the vehicle when the tax became chargeable. If this evidence is accepted, the obligation to pay should not fall on the former owner. According to Notícias ao Minuto, the decision has a direct impact on cases of car sales, in which the State, for administrative purposes, fines or taxes, often uses the name contained in the registration.
The Supreme Court’s understanding is also close to recent decisions by the Constitutional Court, which considered problematic a reading of the law that always prevented the taxpayer from proving that the vehicle already belonged to another person. The Constitutional Court held that the person registered in the register can present evidence to demonstrate that the property was transferred before the tax was due.
Case involved 29 vehicles
The decision came from a case in which a bank in Portugal received notifications to pay IUC for 29 vehicles, with a total value of more than three thousand euros. According to Notícias ao Minuto, the vehicles in question had already been sold.
The Supreme Court understood that the Revenue cannot collect the IUC just based on the administrative record when the taxpayer can demonstrate that he transferred the property right to another person. This reading does not eliminate the importance of car registration. Registration continues to be the starting point for identifying the taxable person. The difference is that it is no longer absolute truth when there are documents capable of proving the sale or transfer.
What evidence might be relevant?
The decision does not transform any allegation into automatic payment exemption. The former owner will have to present elements that demonstrate that the vehicle was effectively transferred. Sales documents, contracts, transfer declarations, proof of delivery of the vehicle or other elements may be involved that make it possible to show that, on the relevant date, the car was no longer owned by the person notified.
The essential thing is that the proof allows the presumption created by the registration to be reversed. If the taxpayer fails to demonstrate anything, the Federal Revenue Service will continue to be able to consider anyone who appears as the owner on the vehicle registration as liable.
When is IUC paid in 2026?
The decision comes in a year in which there were also doubts about IUC payment deadlines. Despite the changes planned for the future, in 2026 the tax continues to be paid until the last day of the month in which the vehicle is registered, in the years following the year of registration. This is the rule indicated on the Finance Portal and the gov.pt portal.
The IRS also reminded that, in 2026, payment must continue to be made in the month of registration, warning taxpayers to avoid late payments. Changes to the IUC calendar should only take effect later, so owners must confirm the month of registration and consult the billing note on the Finance Portal.
What changes for those who sold the car
For those who sold a vehicle and continue to receive IPVA charges, the STF’s decision may be relevant. The taxpayer is not automatically free from debt, but now has a reinforced argument to prove that he was no longer the beneficial owner.
The decisive point becomes the test. If you can demonstrate that the car was passed on before the tax was due, the former registered owner may be able to dispute the charge. Still, the practical recommendation remains: whenever you sell a car, you should ensure that the change of ownership is registered as quickly as possible. The STF’s decision stops automatic charging in certain cases, but does not replace the importance of keeping the registration updated.
Also read:
