The European Court of Auditors points to an ineffective fight against illicit trade

The illicit trade in tobacco products continues to represent a major challenge for the European Union.[1]. According to an estimate (disputed by independent researchers) by the European Commission, this activity costs the EU and its member states approximately €13 billion annually in uncollected customs duties, VAT, and excise taxes—more than the €11.2 billion per year the Commission aims to generate through the new tobacco tax, intended to finance the next EU budget. The sale of discounted tobacco products also undermines public health policies aimed at reducing smoking and exposure to secondhand smoke. Furthermore, it constitutes a significant source of income for organized crime networks, while the risk of detection and penalties sometimes remains limited. The landscape of illicit trade has evolved in recent years: it still primarily involves the smuggling of products manufactured by tobacco companies, but also includes illegal manufacturing within the EU itself. Criminal networks are adapting their methods, notably by developing sites and diversifying distribution and delivery methods in order to limit the impact of seizures by law enforcement.

The data is still insufficient and fragmented.

The European Court of Auditors believes that the EU lacks a sufficiently comprehensive understanding of the scale, structure, and economic impact of the illicit tobacco market, estimating that approximately 10% of cigarettes smoked in the EU originate from smuggling or illicit manufacturing facilities. Several European bodies collect information, but using different methods and with different objectives. Europol focuses particularly on clandestine production sites, the Directorate-General for Taxation and Customs Union compiles customs seizures, while the European Anti-Fraud Office (OLAF) analyzes various data submitted by Member States. However, no reports on data from the product tracking and tracing system are published. This results in a fragmented and unrevealing picture of the phenomenon.

The Court warns that the [document] refers to external studies., some of which are funded by the tobacco industry. The Court calls for the establishment of an independent, harmonized, and regularly updated methodology to measure the scale and economic impact of the illicit market. This recommendation is fully aligned with the recommendations put forward by civil society organizations and a number of Member States concerned about having independent data on the subject, which is particularly exploited by the tobacco industry.

Disparate national rules and practices

The Court notes significant differences between Member States regarding regulations, controls, and sanctions for combating the illicit trade in tobacco products. For example, online sales are subject to different national approaches. Any discrepancies between existing laws can create loopholes that criminal organizations can exploit.

Furthermore, customs authorities do not have the same powers everywhere. In Belgium, Spain, and Poland, they can conduct thorough investigations and coordinate certain operations. In Romania, criminal investigations fall solely under the purview of law enforcement agencies, making inter-institutional cooperation particularly important. Differences also exist in national strategies, technological resources, and the management of seized goods or equipment. In some countries, destruction can occur quickly. In others, legal constraints necessitate prolonged storage, with associated costs and security risks. The Court also notes that one State still authorizes, under certain circumstances, the sale or auctioning of seized machinery, without a sufficiently effective mechanism to prevent its reuse in the black market.

Furthermore, offenses and penalties are defined in varying ways. In nine Member States, smuggling and illicit production are considered criminal offenses. Others apply a mixed system, based on thresholds of quantity involved or severity. The Court believes this situation can lead to unequal levels of deterrence and encourage the displacement of criminal activity to less stringent jurisdictions.

European cooperation is too fragmented.

Furthermore, cooperation between national administrations remains uneven. Customs, police, border services, and judicial authorities generally exchange information and organize joint operations, but IT systems are not always interoperable. In a sample of ten seizures analyzed in each of the four States visited (Belgium, Spain, Poland, Romania), the Court observed an exchange of information with the competent authorities of another Member State in only two to five out of ten cases, depending on the country.

Several communication channels coexist, notably SIENA, managed by Europol, and AFIS, managed by OLAF. These systems operate under different legal frameworks and serve different objectives. However, their use varies among administrations, and authorities do not always have a consistent understanding of their operating rules. Information can thus be transmitted through an inappropriate channel, complicating investigations and slowing down interventions. The Court emphasizes the useful role played by OLAF and Europol in transnational operations. However, it considers that the proliferation of working groups, operations, and European initiatives can lead to duplication, increase the administrative burden, and disperse resources. Currently, no single body is responsible for ensuring the overall coordination of all European actors.

Agreements with industry deemed insufficiently transparent

Due to its direct involvement in organizing smuggling in the 2000s, the agreements historically concluded with the tobacco industry were not renewed by many Member States because they violated the provisions of the WHO Framework Convention on Tobacco Control (FCTC) and the Protocol to Combat Illicit Trade in Tobacco Products. However, approximately half of the Member States still have voluntary agreements with tobacco manufacturers. These agreements include information sharing, technical support, and training activities, with funding provided by the manufacturers. The Court notes, however, that most of these agreements are not publicly accessible or are even confidential. In the four States visited, customs authorities were not precisely aware of the content of the protocols concluded with the manufacturers.

At the European level, the legally binding agreements concluded in 2010 with British American Tobacco and Imperial Tobacco are due to expire in 2030. They have not been revised since their signing, despite the significant evolution of the illicit market and the regulatory framework. OLAF has never issued an official notification of non-compliance with the obligations stipulated in these agreements. The Court concludes that their usefulness has not been clearly demonstrated and recommends that the Commission assess their renewal as their expiry date approaches. In doing so, the Court fails to take into account the fact that the European Union has ratified the Protocol to Combat Illicit Trade in Tobacco Products, which prohibits any agreement with tobacco manufacturers and instead advocates the implementation of mechanisms, particularly in terms of tracking and traceability systems, that are entirely independent of the industry.

The Court of Auditors establishes several recommendations set according to a timetable

The European Court of Auditors is calling on the Commission to strengthen EU action around several priorities: improving information sharing between European bodies and national authorities, establishing an independent and harmonized methodology for regularly measuring the size and economic impact of the illicit market, clarifying the use of the various European information exchange systems, and promoting faster and more comprehensive transmissions with genuine harmonization and interoperability of the systems. In addition, the Court recommends harmonizing regulations on online sales as well as the applicable sanctions. According to the Court, the challenge is to define clearly identified European strategic objectives and priorities, and to regularly assess the effectiveness of the measures taken by the EU and its Member States.

It sets 2028 as the target date for several measures aimed at improving cooperation between Member States and 2029 as the target date for improving data and strengthening the European strategy. Its audit, carried out over the period 2023-2025, concludes that the efforts undertaken have led to some operational progress, but that they remain insufficiently coordinated and poorly evaluated.

Therefore, only more reliable data, better coordination, and greater harmonization of rules will enable the effective implementation of the Protocol to Eliminate Illicit Trade in Tobacco Products, based on Article 15 of the FCTC. The Protocol, which not all Member States have yet ratified, specifically focuses on eliminating all forms of illicit trade in tobacco products through a set of detailed operational measures, including those relating to supply control, the detection, investigation, and prosecution of offences, and international cooperation.

©Generation Without Tobacco

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[1]European Court of Auditors, Combating the illicit tobacco trade in the EU – Fragmented efforts and persistent gaps, Special report 23/2026, Publications Office of the European Union, published on 8 September 2026, accessed on 9 September 2026

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