Portugal becomes first EU country to cut VAT on bicycle purchases this year
Posted on in Business News , Cycles News
Portugal has become the first EU country to cut VAT on bicycle purchases this year, from 23% to 6%.
The move comes 12 months after new EU legislation permitted such changes, and Portugal sees it as part of a bid to boost cycling to 10% of all trips by 2030. The European Cyclists’ Federation (ECF) estimates customers will save up to €300 on a €2000 ebike if retailers and suppliers pass savings on to customers.
The move is a major advocacy success for ECF’s Portuguese member organisations, together with the country’s bicycle industry association ABIMOTA. For MUBi, which advocates, encourages, and demonstrate the benefits of urban cycling, it was one of six priority points for their campaign on cycling-friendly measures.
Rui Igreja from MUBi said: “We are very happy that, after dozens of meetings, the Portuguese Parliament has listened to MUBi’s arguments for reduced VAT rate on bicycles. The reduction from 23% to 6% will make pedelecs and cargo bikes more accessible. These have a high potential to substitute daily car trips, but their high price tag has been an obstacle to their adoption in Portugal. The yearly cost of this measure will be lower than what the current duty reduction on road fossil fuels costs per week. Besides, unlike motorised vehicles, cycling generates significant positive externalities, namely in terms of public health, which largely outweigh the costs of the VAT reduction.”
At a European level, the potential to reduce VAT rates on supply, rental and repair of bicycles, including e-bikes, was opened when the corresponding legislation entered into force in April 2022. ECF had advocated for this possibility in a joint campaign together with the Confederation of the European Bicycle Industry (CONEBI), and supported by Cycling Industries Europe (CIE). After the change in the legislation, the three organisations together supported their respective members in their national advocacy efforts, which now have borne fruit for the first time.
The cycling sector now looks to other EU countries joining Portugal in making bicycles more accessible for citizens through VAT reductions.