Tobacco Taxation in the European Union
In 2019 alone, taxes on tobacco products raised more than €110 billion for governments across Europe.
In the European Union, extensive tobacco control measures regulate the production, trade, packaging, advertising and taxation of tobacco products. Specifically in terms of taxation, the Tobacco Excise Directive (2011/64/EU) set out the EU legislative framework for pricing and taxation of tobacco products placed on the EU market.
EU legislation on excise duties for manufactured tobacco defines:
- the categories of manufactured tobacco products
- the principles of taxation
- the minimum rates and structures to be applied.
Manufactured tobacco is also subject to the common provisions for excisable goods under EU law.
Directive 2011/64/EU requires Member States to levy a minimum rate of excise duties on cigarettes and sets down minimum excise duty rates for manufactured tobacco other than cigarettes. The structure for taxing “other tobacco products” is slightly different than for cigarettes.
Taxation is a national competency in the European Union, with Member States having the individual freedom to set their own levels of taxation, taking into account the differences between national markets, structures and consumer profiles. As taxation in the EU is mainly a national prerogative, excise rates differ from one Member State to another. You can find the latest Excise Duty table on the website of the European Commission’s Directorate General on taxation (situation as of 1st July 2021).
Member States can choose between applying a specific component or an ad valorem component, or if they wish, they may apply a mixture of the two.
Minimum rates are set out for three distinct categories of “other tobacco products”