Indirect taxes will have a greater weight in the Portuguese wallet in 2026. Total tax revenue is expected to increase by 4.4%, reaching 67,065 million euros, according to the State Budget proposal for 2026 (OE2026). Among the sources that will contribute most to this growth are VAT, the Tax on Petroleum Products (ISP), the Stamp Duty and the Vehicle Tax (ISV).
According to Notícias ao Minuto, the Executive estimates that both direct and indirect taxes will increase, but it will be the latter that will drive the largest share of revenue. The forecast points to a 4.9% growth in indirect taxes, above the 3.7% expected in direct taxes.
VAT will generate another 27 billion euros
According to the Government’s proposal, “in 2026, VAT revenue should register an increase of 5.1% compared to the estimated implementation for 2025”, reaching 27,489 million euros. This growth, explains the publication, reflects “the evolution of nominal private consumption”, that is, the expected increase in family expenses.
VAT, as it is charged on practically all goods and services, is the main indirect tax in Portugal, and the one that contributes most to total tax revenue.
Taxes on fuel and tobacco also rise
The OE2026 document also foresees an increase in Special Consumption Taxes (IEC). The Government estimates that ISP revenue will increase by 4.6%, 187 million euros more than in 2025. The Tobacco Tax (IT) is also expected to grow by 4.4%, and the Tax on Alcohol and Alcoholic Beverages (IABA) will increase by 2.5%, equivalent to an additional 8 million euros.
According to Notícias ao Minuto, these variations are explained by the “growth trend in private consumption”, which is expected to remain high next year, driven by the economic recovery and moderation in inflation.
ISV and Stamp Tax follow the trend
The budget proposal also foresees an increase in Vehicle Tax (ISV), whose revenue should reach 511 million euros, 22 million more compared to 2025. Stamp Tax (IS) is expected to grow 5.4%, reaching 2,458 million euros next year.
According to the same source, the Government justifies this evolution with the increase in the number of financial transactions, banking operations and contracts that are subject to this tax.
Indirect taxes: what they are and why they weigh more
Indirect taxes are those that affect consumption and not directly on income or assets. They are present in everyday life: in gasoline, in cigarettes, in supermarket purchases, in new cars and even in the services provided.
Because they are charged at different moments of consumption, they end up affecting all taxpayers across the board, regardless of income level. This is why any change in these taxes has an immediate impact on the cost of living.
2026 will bring greater tax burden on consumption
According to Notícias ao Minuto, the overall increase in tax revenue predicted by the Government demonstrates that the budget strategy for 2026 continues to focus on revenue through consumption.
Although no direct increases in VAT or IEC rates are foreseen, the evolution of prices and consumption should translate into a real increase in what taxpayers pay.
In short, even without new taxes, the State will collect more, reflecting the economic recovery, increased consumption and the maintenance of high levels of taxation on essential and luxury goods.
In a year in which the Government promises to ease the IRS burden, it will be indirect taxes, those that citizens pay without almost realizing it, that will guarantee the majority of the country’s tax revenues.
Also read:
