Portugal is set to reform the payment calendar for the Imposto Único de Circulação (IUC – aka vehicle tax). While the change will not take effect immediately, it is relevant for all vehicle owners in Portugal, including expats residing in Madeira, to begin planning ahead.Under a legislative authorisation approved by the Government, the long-standing rule linking IUC payment to the vehicle’s registration month will be abolished. The new framework is expected to apply from 2027 onwards, subject to parliamentary approval.
How IUC Is Paid Today?
Currently, IUC is due annually in the month of first vehicle registration. This means payment deadlines vary widely, depending on when the vehicle was originally registered.Although this system spreads payments throughout the year, it has also led to frequent missed deadlines, penalties, and administrative inefficiencies. These shortcomings are at the core of the proposed reform.
What Will Change from 2027
From 2027, IUC will move to a fixed national calendar, identical across mainland Portugal and the Autonomous Region of Madeira. The tax will no longer depend on the registration anniversary.Instead, April will become the reference month, with the possibility of instalment payments depending on the amount due.Under the approved proposal, the payment structure will be as follows:
- IUC up to €100: single payment in April
- IUC between €100 and €500: two instalments, payable in April and October
- IUC above €500: three instalments, payable in April, July, and October
In all cases, April becomes the starting point for IUC compliance.
Transitional Rules for 2027
To prevent situations where taxpayers would face two IUC payments in quick succession, the Government has announced a transitional regime for 2027.
For that year only, IUC will be payable as follows:
- Up to €500: single payment in October 2027
- Above €500: two instalments, payable in July and October 2027
This transitional arrangement is intended to protect taxpayers who would otherwise pay IUC late in 2026 and again shortly afterwards under the new April calendar.
Practical Impact for Madeira Residents
For most vehicle owners in Madeira, the reform represents a change in timing rather than cost. There is no increase in IUC rates associated with this measure.
Taxpayers with higher-value vehicles or multiple cars may benefit from automatic instalment payments, easing short-term cash-flow pressure.
Importantly, 2026 remains unchanged. IUC will still be payable in the registration month for that year. The new system only applies from 2027 onwards.
Why the Government Is Making This Change
According to the official justification, the current IUC model creates unnecessary administrative complexity and increases the risk of unintentional non-compliance.A fixed payment calendar is expected to improve predictability, simplify communication, and reduce late payments and penalties.
Key Takeaway
From 2027, IUC in Portugal and Madeira will be paid according to a fixed April-based calendar, replacing the registration-month system. While the tax amount remains unchanged, taxpayers should adjust their budgeting and compliance planning accordingly.
This article is provided for general informational purposes only and does not constitute legal or tax advice. The proposed changes to the IUC payment regime are based on a legislative authorisation and remain subject to parliamentary approval and final enactment. Taxpayers should seek professional advice tailored to their specific circumstances before taking any action.
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