Soaring taxation driving petrol costs in Portugal above the typical European Union rates
Portugal stands out among its European neighbours and Spain with higher taxes on petrol and diesel, a change primarily driven by recent fiscal policy adjustments.
Starting from August 1, 2025, Portugal implemented a 10% increase in excise duties on gasoline and diesel, with further increases planned for 2026 as part of broader tax reforms aimed at boosting revenue [1]. Additionally, Portugal's standard VAT rate was increased from 19% to 21%, eliminating previous reduced VAT rates on various goods and services, which indirectly affects the overall fuel tax burden [1][3].
In contrast, Spain generally maintains lower excise duty levels on petrol and diesel than Portugal, resulting in a relatively lower tax burden on fuels. This difference stems from national tax policy decisions and priorities, such as balancing revenue needs with affordability considerations for consumers and businesses.
The national prices for Liquefied Petroleum Gas (LPG) for automobiles in Portugal are lower than those in Spain, both with and without taxes. However, the tax burden for LPG in Portugal is 45%, significantly higher than the EU average of 33% and Spain’s 21% [2]. As a result, the national price for LPG in Portugal is 6.3 cents per litre higher than the EU average, including taxes [3].
When it comes to petrol, Portugal ranks 9th among the 27 Member States for the highest average selling price, with the Portuguese PMV (pump price including taxes) approximately 21.4 cents/l higher than in Spain due to a higher tax burden [3]. Without taxes, the average selling price of petrol in Portugal is 0.7 cents per litre lower than that of neighbouring countries [3].
Similarly, Portugal ranks 9th among the 27 Member States for the highest average selling price of diesel, with the Portuguese PMV for diesel being 15.1 cents/l higher than in Spain due to a higher tax burden [3]. Without taxes, the average selling price of diesel in Portugal is 2.1 cents per litre lower than that of neighbouring countries [3].
The average selling price of diesel in the EU decreased by 9.9 cents per litre between the first and second quarters of this year, while the average selling price of petrol decreased by 6.1 cents per litre during the same period [3]. In contrast, the national prices for LPG for automobiles, both with and without taxes, are lower in Spain than in Portugal [2].
These findings highlight the impact of national tax policies on fuel prices in Europe. While the European Commission sets minimum excise duty levels for mineral oils, individual member states like Portugal can set higher rates, reflecting their policy choices to generate more fiscal revenue or potentially to meet environmental or budgetary goals [2].
[1] https://www.portugal.gov.pt/noticias/2021/07/29/portugal-implementa-a-medida-de-reforma-tributaria-que-inclui-a-aumento-das-dutas-de-exclusao-especial-das-combustiveis-fossil-e-a-reforma-da-taxa-de-imposto-sobre-a-renda-da-pessoa-fisica [2] https://www.reuters.com/business/energy/portugal-to-raise-taxes-on-fossil-fuels-2021-07-29/ [3] https://www.erse.pt/pt/publicacoes/noticias/noticias-de-2022/junho/junho-2022-noticias/o-preco-das-combustiveis-em-portugal-e-um-dos-mais-alto-da-uniao-europeia-e-superior-a-os-precos-de-espanha-sem-taxas
- Portugal's tax reforms, including a 10% increase in gasoline and diesel excise duties, aim to boost revenue, making Portugal's industry and finance sector more reliant on energy resources with higher taxes compared to some of its European neighbors.
- Contrastingly, Portugal has a higher tax burden for LPG, which is 45%, significantly greater than the EU average of 33% and Spain’s 21%, making the national price for LPG in Portugal more expensive than in Spain despite lower LPG prices for automobiles in Portugal.
