Buying A Car In Portugal: Taxes And Tips For Expats

Last Updated on February 17, 2024 by Maryam Siddiqui

Relocating isn’t enough; you’ve got to explore your new home thoroughly! So, how do you do that? Is relying on public transport enough, or would you end up buying a car in Portugal? It’s a process that cannot be rushed and is as important as looking for accommodation. 

In this article, see if it is worth investing in your own vehicle, new or used, at car dealerships or privately, to buy or lease. The streets of Portugal may be a little different from what you’re used to, and you might not even need a car at all.

Find out tips from other expats who have been through this and learn from their mistakes. We’ll cover whether you need to be buying a car in Portugal, how to do it, and what you should keep in mind. Good reading!

Is buying a car in Portugal worth it?

Well, it depends on your needs and financial capacity. One of the main decisions when moving from your country to Portugal and creating a new home has to do with transport.

Buying a car in Portugal can be a great deal for your family, especially if you don’t want to rely on public transport.

While living in Lisbon or living in Porto, the biggest cities in Portugal, you’ll see that the public transport systems work very well. From trams to buses, trains, and subways, it is generally very punctual and not that expensive.

✔️ Pro Tip: The majority of central Lisbon prefers to use public transport only. The city has excellent modes of transport and roads are busy, so it’s almost always better to avoid driving! 

So, if you’re not going out of the city centers, buying a car might not even be worth it. However, living on the outskirts also means you need a car in Portugal.

Furthermore, if you want to explore Portugal better on your own, you should definitely consider getting yourself a car. Better yet, if you’re planning to live in the Algarve, Alentejo, or Centro, you’ll feel the need to have your own vehicle to take you places.

Of course, there is always the option of ordering a taxi or renting a car for a while, but having your own car makes living in Portugal much more comfortable.

• Read Also: Public Transport In Portugal: Here’s All You Need To Know.

What you should know before buying a car in Portugal

Before choosing to buy a car in Portugal, it is good to pay attention to some specific facts of bureaucracy and day-to-day life on Portuguese roads.

Importing cars into Portugal may be very expensive

If you want to bring your car, with a third-country license plate, to Portugal, think twice. Vehicle import taxes are very high.

So much so that, although the price of cars in Portugal is, on average, much higher than in other European countries, taxes make importing even more expensive. 

To start with, cars with less than 6 months of registration or less than 6,000 km are considered new cars. Therefore, you will always be charged 23% of the car’s IVA, Imposto Sobre Valor Acrescentado (VAT) price in Portugal, regardless of whether you paid it in the country of origin.

However, expatriates who move to Portugal may be exempt from paying vehicle tax (ISV), VAT and customs duties to import a vehicle. One of several advantages offered by the Portuguese government to non-habitual residents.

To be eligible for this benefit, you must have the car registration in your name for at least 6 months before moving to Portugal. This tax benefit is valid for the first 10 years of your legal residence in Portugal.

Find out how to obtain the vehicle tax exemption on the official website of the Tributary and Customs Authority.

If, however, you are not going to fix residency in Portugal or don’t meet all the conditions, you will have to pay import taxes normally. Then it will be very expensive.

For example, when importing a car from outside the EU to Portugal with a value of approximately €25,000, you will have to pay around €50,000 in taxes, depending on your vehicle’s year and engine capacity.

• Check out our guide on How To Import A Car To Portugal for detailed information on how to do it and how long it can take. Is it better than buying a car in Portugal? Read to find out!

Parking in Portugal can be tricky

Remember how the streets of the Portuguese city you are going to live in are. Are they narrow and cobblestoned? Is the city very hilly? Does the place where you will live have a garage, or will you have to find a parking space on the street?

✔️ Pro Tip: Get a car with good suspension and preferably a tall one. In addition, you’ll be luckier if you don’t choose a vehicle that is too long, fits in tight spaces, and adapts to old narrow Portuguese streets. You never know when your driving skills are going to be tested!

Know your taxes

Portugal, like all European countries, is known for taxing vehicles well. The taxes that a vehicle owner in Portugal, regardless of nationality, should be aware of are:

• ISV (Imposto Sobre Veículo): a car registration tax paid once when the vehicle is registered for the first time in Portugal, whether it’s new or used;
• IUC (Imposto Único de Circulação): an annual tax levied on the ownership of a vehicle, paid until the car registration is canceled. Values are updated annually and vary according to the vehicle’s registration year and engine displacement.

You can simulate how much your car’s taxes would be in Portugal on the reference website Imposto Sobre Veículos, available in Portuguese.

Fuel isn’t cheap

Besides that, fuel prices in Portugal are also among the most expensive on the European continent. Check the table below for a price comparison between Portugal and other countries on different fuels:

Values are taken from the Global Petrol Prices website (as of February 2024).

All prices are in Euro to make comparisons easier.

Don’t forget about warranties, car insurance, and inspections

A safety recommendation is to make a deal that includes a warranty of at least 1 year when buying a car in Portugal. Car dealerships offer this, and especially with used cars, it’s a good idea.

In addition to taxes, you should also consider that you will have to spend on mandatory Liability Insurance. Many car dealerships also sell car insurance, usually costing around €250 per year.

Periodic inspections are also important to keep in mind when buying a car. In Portugal, all cars with more than 4 years of registration are subject to mandatory periodic inspections. They cost around €30 and guarantee that your car is in condition to circulate on public roads.

You must take your vehicle to an Inspection Center near your home by the scheduled date. Know when to take your car for inspection in the IMT Vehicle Inspection Simulator.

Where to buy a car in Portugal?

When buying a car in Portugal, you’ve got two options; car dealership and online websites.

Car Dealership in Portugal 

There are several good dealerships to serve you and provide first-class service. Buying from a dealership is quite a typical process and, well, a pretty good one. 

Many people still prefer buying from car dealerships because they need that physical touchpoint to verify their next big purchase. If you’re someone who likes to see what they’re buying and examine the specs, you should go to the nearest dealership.

Finding a car dealer near your residence is fairly simple; you’ll notice them while you travel around. Alternatively, you can ask your neighbor for help, and they’d love to guide you. You could also join our Facebook Group – All About Portugal For Expats, if you want to connect with someone online.

Online

But if your goal is to buy a second hand car with little mileage, it’s worth looking at online car sales websites. 

Many dealerships advertise their second hand cars on these sites, and the search process is much easier for the buyer. These websites could also be your best option if you want to sell your car.

When buying a car online in Portugal, pay attention to the vehicle’s details. It’s mainly about who is selling, whether it’s a stand or a private sale. Pay extra attention to sales by owners; it’s always good to be careful.

Other than that, pay attention to the year, mileage, up-to-date revisions, photos, and so on.

It’s not uncommon to visit several cars until you buy the ideal one, or buy in cities other than the one you live in. Portugal is not that big, and sellers are often in other areas.

The best websites to buy cars online in Portugal

To help you out, we’ve compiled some of the top reliable websites. Let’s look at the main ones:

Standvirtual

Standvirtual is very popular in Portugal. It’s a platform that welcomes almost six million people every month and lists over forty-thousand vehicles. 

The company is very trusted as it’s been in the industry for a little over twelve years. And continues to be one of the best ways to buy a car.

Why is it one of the best ways? Their website search filters allow you to narrow down your options based on a lot of different things. For e.g. a coupe or a sedan, then brands, kilometers, and fuel types too. Another cool feature is that the website also sells car components like lights, gearboxes, or other electronic components. 

OLX Carros

The website OLX Carros is another great online retailer that many approve of. Here you can find options ranging from a Porsche to Renault Clio, and everything in between. 

The Renault Clio is the most preferred car by the Portuguese; you’ll see many around in the streets. Residents find it perfect in terms of practicality, equipment, and style. You can browse for pictures on the OLX Carros website.

AutoSapo

AutoSapo is one more really good website that’ll help you get around Portugal in your new car. The platform launched thirteen years ago, so you can undoubtedly trust them with your purchase. Auto Sapo deals specifically in used cars and is one of the largest in the country to do just that. 

We find their website user interface to be easy-to-use and straightforward. Given that the filters aren’t that detailed, you’ll have to spend your time browsing your options. But once you find something you like, the process is fairly simple.

Custo Justo

Yet another reliable website to buy a car is Custo Justo. The platform is a huge marketplace for a lot of other items too. It deals in clothing, household appliances, antiques, and real estate, to name a few categories. 

Under the category of vehicles, Custo Justo sells used cars, motorcycles, car parts, boats, and other vehicles. Like Auto Sapo, their user interface is extremely to-the-point, and they have an app for iOS and Android for your convenience.

Facebook Marketplace

If you’re not already aware, Facebook Marketplace has revolutionized online shopping using social media. You can find the option when you log in to the app or website. It’s a convenient way to discover, buy, and sell items near you.

Unlike other websites we’ve listed above, you can’t actually buy a car on Facebook. How it works is that you connect with a seller you want to buy from. You can coordinate with them via the app’s messenger service and make the purchase directly.

Facebook assumes no responsibility for the deal; its only service includes helping a buyer connect to the seller. To everyone’s surprise, Facebook Marketplace is an excellent way to do business or sell off unused items in your house. 

✔️ Pro Tip: Research every little detail that you want in a car. Things will be a little different than what they were back in your home country. Take your time to learn about car dealerships and other modes of buying!

How much do cars cost in Portugal?

Here’s an estimate according to our research carried out on the cost of living in Portugal and sources from Numbeo (as of February 2024):

• Volkswagen Golf 1.4 90 KW Trendline (new car or equivalent) car is in the €29,700 range;
• Toyota Corolla Sedan 1.6l 97kW Comfort (new car or equivalent) sells for at least €31,000.

With a sudden increase in demand after the pandemic, used cars in Portugal had a price increase of up to 20%. Público reported that the upsurge is due to the shortage of chips needed to produce new cars, which delayed up to 12 months for deliveries.

Data from the Standvirtual website published by the Observador newspaper show average increases in the prices of the following types of cars:

• Used sedan, advertised for sale, costs an average of €21,500.
• A used SUV is priced, on average, between €21,000 and €23,000, while two years ago, the value would go from €19,500 to €20,000.

Buying a car in Portugal: documents and registration

Once the car has been chosen, it is time for purchase and mandatory registration.

To register a car in your name, you can go in person to a Conservatória do Registo Automóvel (car registration office) or a Loja do Cidadão. Or, if you prefer to do it online, through the Automóvel Online platform.

This procedure can be performed either by the vehicle owner or by its legal representative. In case of a used car, you must update the registration in the same places.

It is also worth remembering that only residents in Portugal can buy and register a car in their name.

As the vehicle owner, you must submit the following documents for registration:

• NIF (Tax Identification Number);
• Valid residence card or passport;
• Proof of permanent residence in Portugal;
• Bank account details.

Don’t worry; to buy a car in Portugal, you can use your driver’s license from your country of origin, as long as it is valid.

✔️ Pro Tip: Make sure that your deal includes at least a one-year warranty. You don’t want to look after it frequently!

How can a foreigner get a driver’s license in Portugal?

If you want to drive in Portugal, you’ll also have to think about how to get a Portuguese driver’s license. Especially if you’re not an EU citizen.

So, to get a driver’s license in Portugal, you can either:

• Take the driving test in Portugal from scratch, in Portuguese;
• Exchange your driver’s license from your country for the Portuguese one.

In addition, the Portuguese law of 2020 provides that new residents transfer their driver’s license to Portugal within a maximum of 2 years of residence in the country.

If you choose to take the driver’s test in Portugal completely from scratch, you will have the advantage of learning the traffic laws in Portugal with a professional.

But, if changing your driver’s license to a Portuguese one is simpler for you, it’s worth it. Attention, to be able to exchange your driver’s license for a Portuguese driver’s license, you have to fulfill some prerequisites.

The process of exchanging a driver’s license from a foreign country for a Portuguese one is simple and can be done by foreigners with regular residence in the country. That is, when you already have your visa in hand or a valid residence card.

Depending on whether your and your license’s country has an international agreement or is part of a convention with Portugal or not, the rules for exchanging it change a little.

• Got any FAQs about Portugal? Check out our compiled answers for the most common questions!

How to exchange my driver’s license for a Portuguese one?

We have a complete article on How To Get A Driver’s License In Portugal for foreigners. It includes the eligibility criteria, how to renew an old one, and how to exchange an International Driving Permit for a Portuguese one. 

The procedure below can be done by citizens from Australia, New Zealand, the United States of America, Canada, South Africa, the United Kingdom, Ireland, and many others.

Although your own International Driving Permit can be accepted within the first 185 days of your entry to Portugal, then you will need to adapt to the new country.

In your first 90 days in Portugal, you can request the exchange of your driver’s license from your country for the Portuguese one at the IMT (Institute of Mobility and Transport).

If you have been in Portugal for more than 90 days, your foreign driver’s license will no longer be valid. However, you can still apply to IMT for an exchange of up to 2 years of residence in the country.

To apply, you must send IMT the following documents:

• Exchange of Foreign Driving License filled application;
• Health certificate issued by a doctor in Portugal;
• Residence permit;
• Certificate of authenticity of the driver’s license issued by consular services;
• Your driver’s license;
• A certified translation of your driver’s license if the content is in any language other than Portuguese, French, English, or Spanish.

In addition to sending the documents, you must pay a €30 fee. Once all is sent and paid, you will be asked to go in person to an IMT near you to collect your biometric data.

If you’ve been living in Portugal for 2 years and have never applied for a Portuguese license, time is up. You can no longer exchange it. You will have to pass a practical driving test in Portugal.

Ready to buy your car in Portugal?

In addition to knowing all the bureaucracy involved in buying a car in Portugal, don’t underestimate the oldest method in the world: word of mouth.

Knowing the opinion of other expats in Portugal and tips and recommendations can help you find the best car at the best price. And, of course, if you’re in a good relationship with the locals, nobody knows Portugal better than the Portuguese people.

Don’t feel shy to ask around, get second opinions on car dealerships, and learn from others’ mistakes. Like any type of purchase, buying a car requires detailed analysis. Get the guidance you need to adapt better to a new country.

Viv Europe runs a Facebook Group – All About Portugal For Expats, if you’re interested. Join us and meet others on the same journey as you.

And don’t forget, you can count on Viv Europe‘s team of professionals for everything you need in your relocation process to Portugal.

We hope this article was helpful in your research. Drive carefully, and we’ll see you in Portugal!