The Cyprus Presidency of the Council of the EU has proposed lowering the requirement for an overall excise duty from 63% to 60% of the weighted average retail selling price of cigarettes offered for consumption, according to the latest draft compromise, dated Tuesday 17 March (see EUROPE 13813/16).
This draft compromise on the revision of the tobacco taxation directives, which Agence Europe was able to obtain, will be discussed at the meeting of the EU Council Working Party on Tax Questions on Tuesday 24 March. According to the Presidency’s comments, this reduction, which was a red line for them, was requested by a number of Member States. In order to understand the reasons for this request, the Presidency consulted them and found that their motives were different. “The Presidency has taken on board these requests as an opportunity for Member States to assess whether it can be accepted within the overall provisions of the Directive”, it adds.
According to our information, if this proposal is adopted, rolling tobacco, for which consumers also have to buy papers and filters, will be less affordable than cigarettes, which are a finished product. This would run counter to the demands of Eastern and Southern European countries.
Nicotine products and liquids for electronic cigarettes. The Presidency also suggested setting the overall excise duty on nicotine pouches and other nicotine products that are at least 50% of the retail selling price, including all taxes, or €107. By way of derogation, from 1 January 2028 to 31 December 2029, these rates of excise duty will be at least 10% of the retail selling price, inclusive of all taxes, or €30 per kilogram. Then, from 1 January 2030 to 31 December 2031, these excise duty rates would rise to 25% of the retail selling price, including all taxes, or €71.5 per kilogram.
With regard to e-cigarette liquids, the previous compromise would meet the need for some States to tax high nicotine content e-cigarette liquids more heavily, while allowing others to tax them as a single category. “However, while the intention was appreciated, the proposed text would still require Member States to distinguish between the two product categories for movement purposes, despite the fact that their taxation may be the same”, stressed the Presidency.
Other Member States have asked for a return to a single category and for a derogation to be added for Member States wanting to tax products with a high nicotine content more heavily. However, this change would still pose problems for the circulation of these products.
The Presidency has therefore proposed a new classification, dividing liquids into two categories: liquids containing no nicotine and liquids containing nicotine. “The change is believed to provide a fairer distinction while being consistent with the Combined Nomenclature in which the liquids for electronic cigarettes are also separated in the same way”, it justified.
To see the document: https://aeur.eu/f/l91 (Original version in French by Anne Damiani, with Camille-Cerise Gessant)