Portuguese bicycle VAT reduced from 23% to 6%

On November 23, the Portuguese Parliament decided to reduce the value-added tax on bicycles and bicycle maintenance from 23% to only 6%. The reduction of VAT will take effect in 2023.

Although Portugal does not have the extensive bicycle culture of Northern Europe, its two wheeled vehicle manufacturing industry is very strong. Statistics show that Portugal has become the largest bicycle producer in Europe for three consecutive years. According to Eurostat data, the EU produced about 13.5 million bicycles last year, and one fifth of them came from Portugal. From 2020 to 2021, Portugal’s exports grew by 39%. In the first quarter of 22, the growth rate of Portugal’s exports soared to 49%. Today, the export volume of Portugal’s bicycle industry reaches 594 million euros every year.

The top five bicycle producing countries in the EU are Portugal, Romania, Italy, Germany and Poland. The UK and Switzerland are the main destinations for European bicycle exports.
According to Abimota, a bicycle industry organization, the bicycle industry has become one of the fastest growing industries in Portugal, which has brought a strong impetus to Portugal’s economic development. In the past five years, the employment rate of bicycle related occupations has increased by 65%, reaching 7800 people. This country with a population of 10 million has undertaken more than one fifth of the bicycle production in the EU.

The reduction of value-added tax on the bicycle industry also provides tax policy support for the goal of becoming a powerful Portuguese bicycle producer. Through the price transmission mechanism, this measure in Portugal not only reduces the burden on enterprises and promotes production, but also stimulates domestic bicycle market demand, laying the groundwork for the popularization of low-carbon transportation. In the European Union, many countries are adding infrastructure for bicycles, including Paris, Berlin, Lisbon and Barcelona, Spain. The lower taxes will reduce the cost of Portugal’s bicycle export and naturally increase the export scale.

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