The purpose of this study was to assess the effectiveness of fiscal incentives supporting small businesses in the European Union using the example of Germany, France and Ireland. The methodology was based on the analysis of regulatory and statistical sources, comparative analysis of tax policy and assessment of innovation indicators of small and medium-sized enterprises in 2022-2025. The results showed that the most effective models combined tax incentives for innovation, digitalisation of tax administration and mechanisms for attracting private capital. German figures, where 41% of small and medium-sized enterprises implemented at least one innovation during 2022-2024 and innovation spending reached EUR 35.4 billion in 2024, demonstrated a relatively high level of innovation activity supported by fiscal and investment incentives, although the gap between large enterprises (73%) and microenterprises (37%) reflected unequal access to innovation resources. France’s innovation efficiency level of 108.6% of the European Union average demonstrated the important role of tax credits and state financing in supporting Research and Development. Ireland’s indicators, including small and medium-sized enterprises introducing product innovations at 120.5% of the European Union average and labour productivity at 256.2%, reflected the effectiveness of combining low corporate taxation with investment incentives. The study found that the effectiveness of fiscal incentives depended not only on tax benefits but also on administrative simplification and integration of tax and financial support mechanisms. The practical significance of the study lies in the possibility of using its results to improve fiscal support instruments and innovation-oriented tax policy for small businesses in the European Union countries

tax policy; corporate taxation; value-added tax; economic growth; innovation support