EU Proposes Higher Taxes on Cigarettes, Vapes, and Nicotine Products

The European Commission is pushing for a significant overhaul of tobacco taxation across the EU, proposing a revision of the Tobacco Taxation Directive. The core of the proposal involves increasing minimum excise tax levels and extending these rules to a wider range of products, including heated tobacco, e-cigarette liquids, and nicotine pouches. This move aims to harmonize taxation and potentially discourage the use of these products.

While the European Parliament rejected the Commission's initial proposal on June 17, 2026, the legislative process is far from over. The Council of the EU, where member states negotiate, is now the primary body responsible for adopting the decision. Unanimity among member states is required for the directive to pass, indicating that further negotiations and potential compromises lie ahead.

The Commission argues that the current EU framework needs updating to reflect the evolving market and the emergence of products not yet covered by common European excise rules. The proposal sets minimum excise duty levels for various tobacco products. For cigarettes, the proposed minimum is 63% of the weighted average retail price or 215 euros per 1,000 cigarettes. Similar minimums are proposed for fine-cut tobacco, other smoking tobacco, and even for shisha tobacco.

Heated tobacco products would be explicitly brought under EU excise rules, with a proposed minimum of 55% of the retail price or 155 euros per kilogram. Transitional levels are also outlined for these products, with further adjustments planned through 2031. The ultimate goal is to create a more consistent and potentially higher tax burden on tobacco and related products throughout the European Union.