The European Commission has proposed a major reform of tobacco taxation to update rules unchanged since 2010. The initiative aims to raise minimum cigarette taxes and introduce common levies on e-cigarettes, heated tobacco, and nicotine products to align with the EU’s goal of a tobacco-free generation by 2040.
Presented on July 16, 2025, the proposal targets three main objectives: increasing minimum tax rates, incorporating new nicotine products into the tax framework, and strengthening oversight of raw tobacco to combat the illicit trade. The proposal is currently under negotiation and requires unanimous approval from the 27 EU member states to take effect.
Raising the Minimum Tax on Traditional Cigarettes
The most visible change in the Commission’s proposal concerns the minimum tax on cigarettes. Current regulations establish a minimum excise duty of €90 per 1,000 cigarettes and a levy equivalent to 60% of the weighted average selling price. Brussels proposes raising these figures to €215 per 1,000 cigarettes and 63%, respectively.
| Taxation of Cigarettes | Current Situation | Commission Proposal |
|---|---|---|
| Minimum per 1,000 Cigarettes | 90 euros | 215 euros |
| Variation of the Monetary Minimum | — | +138.9% |
| Percentage of Weighted Average Price | 60% | 63% |
The jump from €90 to €215 per 1,000 cigarettes represents a 138.9% increase in the European minimum standard. This adjustment does not automatically imply an identical increase in the final retail price of all packs, as member states can apply higher national rates. The proposal also incorporates adjustments related to national price levels.
The Commission estimates that the reform could translate into a retail price increase of between €1 and €2 per pack of cigarettes. The final result will depend on each member state’s tax policy, manufacturers’ pricing strategies, and local market conditions. The proposed implementation date is set for 2028, with transitional periods for specific categories.
Introducing EU-Wide Taxes on Vapes and Nicotine Pouches
A key element of the tobacco tax reform is to eliminate the regulatory fragmentation surrounding new nicotine products. Currently, there is no harmonized EU minimum tax for e-cigarette liquids or nicotine pouches, though many member states already tax them through national systems.
The Commission’s proposal establishes different tax levels depending on the product type and, for vaping products, the nicotine concentration.
| Product Category | Proposed Minimum Tax Rate |
|---|---|
| Vape liquid (up to 15 mg/ml nicotine) | 20% of the price or at least 0.12 euros/ml |
| Vape liquid (more than 15 mg/ml nicotine) | 40% of the price or at least 0.36 euros/ml |
| Nicotine pouches | 50% of the price or 143 euros/kg |
| Other nicotine products | 50% of the price |
| Heated tobacco (in units) | 55% of the price or 108 euros per 1,000 units |
| Heated tobacco (other formats) | 55% of the price or 155 euros/kg |
These rates represent the initial proposal and do not constitute the final tax structure. The Council of the European Union has discussed compromise texts that modify several levels, updating mechanisms, and transition periods. A lack of consensus among member states has prevented these rates from being finalized.
Additionally, Brussels intends to incorporate raw tobacco into the European electronic system for monitoring the movement of excise goods. The Commission estimates that fraud and illegal tobacco production result in annual public revenue losses of up to €13 billion. Improved traceability of raw tobacco aims to mitigate this issue.
Combating Stagnant Smoking Rates and High Healthcare Costs
The health toll of tobacco consumption remains a primary driver for the reform. The European Cancer Plan aims to achieve a tobacco-free generation by 2040, defined as a state where less than 5% of the population uses tobacco. The Commission considers the current rate of decline to be insufficient.
Eurostat data on traditional smoking shows that the proportion of smokers aged 15 and over in the EU was 24% in 2023, down slightly from 26% in 2017. National differences remain high across the bloc.
| Country / Entity | Smoking Population (2023) |
|---|---|
| Bulgaria | 37% |
| Greece | 36% |
| Croatia | 35% |
| European Union Average | 24% |
| Denmark | 14% |
| Netherlands | 11% |
| Sweden | 8% |
Bulgaria recorded the highest rate of traditional smoking, while Sweden recorded the lowest. Among men, the highest rates were in Bulgaria (49%) and Latvia (48%). Among women, Greece had the highest rate at 32%.
Eurostat statistics published on August 5, 2026, show that 16.5% of people aged 16 and over used tobacco or related products daily in 2025, including e-cigarettes, heated tobacco, and nicotine pouches. This is a decrease from 17.5% in 2022. The difference between the 24% and 16.5% figures stems from varying indicators, age groups, and consumption frequencies.
Alternative tobacco products are popular among minors. The World Health Organization (WHO) estimates that 14.3% of adolescents aged 13 to 15 in its European Region use e-cigarettes, while 11.6% use some type of tobacco product.
The economic impact of tobacco is also substantial. A study by the Commission’s Joint Research Centre, published in April 2026, estimates the health and economic costs of tobacco consumption in the EU at €80.7 billion. Of this total, €40.4 billion represents direct costs, and €40.2 billion represents indirect costs. Tobacco is linked to nearly 700,000 deaths each year in the EU, with approximately half of all smokers dying prematurely.
Navigating the Legislative Process and Council Divisions
The legislative process has added uncertainty to the reform. The European Parliament adopted a formal position on June 17, 2026, rejecting the Commission’s main text by 439 votes to 181, with 38 abstentions.
This rejection does not shelve the initiative. European taxation is processed through a special legislative consultation procedure. Under this framework, Parliament issues a non-binding opinion, while the Council must approve the legislation unanimously. All member states must agree for the new tax rules to take effect.
A second proposal aimed at adapting the general system of excise duties was approved by Parliament on June 17, 2026, with 325 votes in favor, 304 against, and 25 abstentions.
The primary difficulties remain within the Council. The Presidency prepared several compromise texts during the first half of 2026, but the tobacco taxation package was withdrawn from the final agenda of the Ecofin meeting on June 12, 2026, due to persistent differences regarding minimum rates, adjustment mechanisms, and transition periods.
As of August 18, 2026, EUR-Lex maintains procedure 2025/0580/CNS as ongoing. There is currently no approved directive requiring member states to raise taxes under the terms originally proposed by Brussels. The outcome depends on whether the 27 member states can resolve differences regarding the scale and speed of the minimum tax increases.
