The government projects an increase in indirect taxes next year, as indicated in the 2026 State Budget proposal (OE2026) presented by the Executive. Both direct and indirect taxes are expected to drive an increase in tax revenue, based on the government’s calculations.
What are indirect taxes? Do you pay any of them?
In the OE2026 proposal, the government mentions the following regarding indirect taxes:
- Value Added Tax (VAT)
“It is estimated that, in 2026, VAT revenue will increase by 5.1% compared to the estimated execution for 2025, reaching 27,489 million euros. The growth in VAT revenue reflects the growth in nominal private consumption.”
- Special Consumption Taxes (IEC)
“Regarding the Special Consumption Taxes, it is anticipated that, in 2026, ISP revenue will increase by 187 million euros, corresponding to a 4.6% rise. This growth stems from the anticipated increase in private consumption. Additionally, IT revenue is expected to rise by 71 million euros (4.4%) due to expected private consumption growth, and IABA revenue will increase by 8 million euros (2.5%), following the trend observed in 2025.”
- Vehicle Tax (ISV)
“ISV revenue is projected to reach 511 million euros in 2026, marking an increase of 22 million euros (4.6%). This growth results from the expected increase in private consumption.”
- Stamp Duty (IS)
“Regarding IS, the revenue is estimated to grow by 126 million euros (5.4%), reaching 2,458 million euros in 2026.”
- Single Circulation Tax (IUC)
“IUC is also expected to have a positive effect on revenue due to the evolution of the automotive market. It is estimated that IUC revenue will grow by 32 million euros (5.7%), reaching 602 million euros in 2026.”
- Other indirect taxes
“This category includes revenue from the Extraordinary Contribution on the Pharmaceutical Industry (CEIF), the Extraordinary Contribution on Suppliers of the National Health Service Medical Devices Industry (CEFID), and the Audiovisual Contribution (CAV) which will remain in effect in 2026. It is anticipated that, in 2026, the revenue from these taxes will amount to 291 million euros, representing an increase of 0.8% compared to the estimated execution for 2025.”
Tax revenue set to accelerate in 2026 with the help of taxes
Tax revenue is expected to increase by 4.4% in 2026, reaching 67,065 million euros, boosted by both direct taxes (+3.7%) and indirect taxes (+4.9), according to the 2026 State Budget proposal (OE2026).
“Tax revenue in 2026 is expected to reflect a growth of 2,828 million euros (4.4%) compared to the revenue estimate for 2025, reaching 67,065 million euros,” states the accompanying report to the proposal.
This increase is due to both the rise in direct taxes (1,055 million euros) and indirect taxes (1,773 million euros), which are expected to grow by 3.7% and 4.9%, respectively, compared to 2025.
For direct taxes, the government anticipates that the Individual Income Tax (IRS) revenue will increase by 5.0% in 2026 compared to the estimated execution for 2025, reaching 19,496 million euros, an increase of 937 million euros.
This estimated growth in IRS revenue, despite the reduction in marginal rates, mainly results from the “favorable evolution of the labor market, both in terms of employment and remuneration per worker,” it explains.
Regarding the Corporate Income Tax (IRC), the executive expects the tax revenue to decline by 2.0% (199 million euros) in 2026 compared to the estimated execution for 2025, falling to 9,532 million euros, reflecting a one-point percentage drop in the applied rate.
Among direct taxes, it also projects that the revenue from the Extraordinary Contribution on the Energy Sector (CESE), Additional IMI (AIMI), and Contribution on the Banking Sector (CSB) will more than triple (+259.6%), reaching 439 million euros, despite the end of the Additional Solidarity Contribution on the Banking Sector (ASSB), declared unconstitutional.
