The Danish Presidency of the EU Council is proposing to tax heated tobacco by weight, regardless of its form, according to the compromise on the revised tobacco taxation directives, which Agence Europe has obtained. This document will be examined at the meeting of the Working Party on Tax Questions on Thursday 4 December.
According to the document, most delegations indicated that they did not support the approach proposed in the recast, which provides for a distinction to be made between heated tobacco in sticks and heated tobacco in other formats. Several delegations expressed the need for a degree of flexibility and the possibility of taxing heated tobacco by weight, even if the product is in stick form. However, some Member States have pointed out the lack of proportionality between the minimum rate proposed for heated tobacco sticks and the minimum rate by weight, which has doubled.
The Presidency has therefore proposed abolishing the minimum rate per unit for heated tobacco. As a result, the minimum rate per kilogram would apply to all types of heated tobacco, with a minimum rate adjusted to €360 per kilogram.
In addition, some delegations mentioned that the taxation of heated tobacco products by the unit could lead to an evolution of the market towards larger and larger units. To take account of this potential development, the Presidency proposes to add a paragraph similar to the one concerning cigarettes, in which a larger unit is considered, for excise purposes, as two or more units, depending on the size of the product.
In addition, some delegations expressed concern about Article 6. Under current legislation, “waterpipe tobacco” comes under the definition of “smoking tobacco”. But these delegations stressed that these two types of tobacco were different. The compromise proposal adds the category “waterpipe tobacco”.
Lastly, the compromise clarifies the concept of “tobacco for oral use”, and specifies that “except those intended to be inhaled or chewed, made wholly or partly of tobacco, in powder or in particulate form or in any combination of those forms, particularly those presented in sachet portions or porous sachets”. The Presidency has thus reworded the expression “placed on the market”, which in its view does not make it clear whether the Directive applies to oral tobacco that has not yet been placed on the market in a Member State, for example oral tobacco stored in a tax warehouse.
“The rewording removes the risk of any misunderstandings regarding if tobacco for oral use is covered by the Directive before it is ‘placed on the market’”, it explained. Furthermore, it considers that this cannot be interpreted as an extension of the exemption provided for in the Act of Accession of Austria, Finland and Sweden (see EUROPE 13711/17).
Link to the compromise proposal: https://aeur.eu/f/jtf (Original version in French by Anne Damiani)