On Wednesday 16 July, the European Commission presented a revision of the directives on excise duties and the general arrangements applicable to tobacco and tobacco products. Presented at the same time as the post-2027 Multiannual Financial Framework (MFF), these new tax revenues would contribute to the EU budget’s new own resources (see EUROPE 13682/1).
In December, sixteen Member States requested this revision from the European Commission, since the last update dates back to 2011 (see EUROPE 13541/13). The illicit manufacture and trade of tobacco currently costs the EU €13 billion in lost tax revenue every year, according to the Commission. These updated minimum tax rates should generate €15 billion in additional annual tax revenue.
Under current legislation, the overall rate of excise duty applied to cigarettes in EU countries, which must combine a specific and a relative component, is at least €90 per 1,000 cigarettes and 60% of the weighted average retail selling price. For cigars and cigarillos, the rate is 5% of the retail selling price or €12 per 1,000 units.
A significant increase in minimum rates. These rates would rise to €215 per 1,000 cigarettes and 63% of the weighted average retail price. For cigars and cigarillos, they would rise to 40% of the retail selling price or at least €143 per 1,000 units.
The text also defines heated tobacco, water pipe tobacco and other manufactured tobacco and the minimum tax rates associated with them, respectively: - 55% of the retail price or €108 per 1,000 pieces if sold individually, or €155 per kg for other formats; - 50% of the price or €107 per kg; - 50% of the retail price including all taxes or €143 per kg.
New products in the directive’s scope. Heated tobacco products account for around 8% of the total value of the tobacco market in the EU, while some Member States have seen a 10% increase in their use in recent years. E-cigarette liquids containing up to 15 mg of nicotine per millilitre would be taxed at 20% of the retail price or at least €0.12 per millilitre, compared with 40% of the price or €0.36 per millilitre for liquids containing more than 15 mg. The rate rises to 50% of the retail price or €143 per kilogram for nicotine pouches and 50% for other nicotine-based products.
Swedish snus, however, remains outside the scope of the directive.
To read the draft revision of the structure and rates of excise duty: https://aeur.eu/f/hx5
To read the appendix: https://aeur.eu/f/hx6
To read the draft revision of the general scheme: https://aeur.eu/f/hx7
To read the impact study: https://aeur.eu/f/hx8 (Original version in French by Anne Damiani)