In brief: The Supreme Administrative Court held, unanimously, that where the tax authority corrects VAT on the resale of used vehicles the tax is calculated inclusively, that is, treating the invoice price as already containing it. The difference against the method used by the authority is around a fifth of the assessment, and it carries through to compensatory interest and to the fine. It matters to dealers and importers, but the logic holds for any VAT correction on prices charged without mention of tax.
The factual situation
A company had bought used cars in other Member States under the general VAT regime and resold them in Portugal under the special margin scheme. The incorrect treatment having been detected, the tax authority computed the tax owed by adding the rate to the amount on the invoice — the so-called exclusive calculation. The first-instance judgment rejected that method and the authority appealed.
What the Supreme Court decided
It dismissed the appeal and upheld the judgment, holding that in this situation the tax must be calculated inclusively, that is, treating the price stated on the invoice as already including VAT. The decision was unanimous.
What the difference is worth
At the standard rate of 23%, the inclusive method yields tax equal to twenty-three one-hundred-and-twenty-thirds of the price, whereas the exclusive method applies 23% to the whole price. The difference approaches a fifth of the amount assessed. And it does not stop at the tax: since compensatory interest and the fine are calculated on the tax owed, the reduction carries through to both.
Why the reach is wider than it looks
The case concerns used vehicles, but the rationale is not specific to the motor trade. What is at stake is what to do where a price was charged without mention of tax and it is later concluded that tax was due. The Supreme Court’s answer is that the amount received by the taxable person is what it is, and that the tax is extracted from within that amount rather than added to it. Any VAT correction built on prices without mention of tax calls for the same reasoning.
In the same session, a different point
On the same day and with the same reporting judge, the Supreme Court confirmed that autonomous taxation charges are excluded from deductibility for corporate income tax, being a tax on expenditure, without offending the principles of taxation of real income and of ability to pay. This is noted for anyone with that question pending, as it runs against the taxpayer.
What to do in practice
The immediate step is documentary and quick. Anyone with an inspection under way, an additional assessment still open to challenge or pending proceedings should go to the inspection report and check which of the two methods was used in the computation — it shows in the calculation formula and in the relationship between base and tax. If it was the exclusive method, there is a basis to invoke this judgment in an administrative complaint, a judicial challenge or a request for arbitral ruling, depending on the stage. It is worth doing so before the periods proper to each route expire, and worth asking at the same time for recalculation of compensatory interest and review of the fine, which follow the fate of the tax. Supreme Administrative Court, case 0435/22.8BELRS.SA1, 09-09-2026, reporting judge Jorge Cortês.
The full newsletter
This note forms part of the edition of 18 September 2026 of the firm’s biweekly newsletter, with thirty-two items in Portuguese and English. The full document, on letterhead, is available here.
This note is provided for information purposes only and does not constitute legal advice. Concrete solutions depend on the facts of each case and on the regime applicable at the time. For specific questions, please consult a lawyer.