Annual Report on Taxation 2026

The resurgence of tensions in the Middle East has triggered a new shock to energy prices, fueling inflationary pressures and weakening confidence in the economic system. At the same time, long-term structural challenges—such as an aging population, the green and digital transitions, and the need to strengthen Europe’s competitiveness—continue to shape the economic policy landscape, making the management of public finances increasingly critical.

To address both immediate pressures and these deeper shifts, governments are increasingly turning to fiscal policy tools, with the aim of protecting the most vulnerable, securing government revenue, and guiding economic adjustment.

In this context, fiscal policy remains a central element of the European Union’s economic and political agenda. Taxation is, first and foremost, the primary source of government revenue; however, its role extends far beyond that. Well-designed tax systems can support employment, direct investment, foster innovation, enhance competitiveness, and contribute to a fairer and more sustainable society. Conversely, poorly designed systems risk disincentivizing economic activity, increasing complexity, and undermining trust in public institutions.

The Annual Report on Taxation 2026 takes stock of recent trends in tax revenue and developments in the ...