European debates surrounding the tax regulation of heated tobacco

The Danish Presidency of the Council of the European Union, with the support of the European Commission, has presented new guidelines for strengthening taxation on heated tobacco and other nicotine products. These proposals come in the context of a review of the European directive on tobacco taxation and have elicited mixed reactions among Member States. For anti-tobacco organizations, this development reflects the need for a coherent and ambitious tax framework for these products, while some pro-industry governments have expressed reservations about the scale of the proposed increases and their impact on national economies.

An expected revision of the European directive on tobacco taxation

The directive on the taxation of tobacco products has not been revised since 2011, even though new products, including heated tobacco devices, nicotine pouches, and vaping products, have profoundly altered the European market. In July 2025, the European Commission proposed a comprehensive modernization of the tax framework to better harmonize excise duty rates, integrate these products, and strengthen controls on the flow of raw tobacco into the internal market. This revision also aims to reduce disparities between Member States, which have thus far had highly variable tax policies regarding these new products. The stated objective is to ensure greater regulatory coherence to support public health policies. The ability of Member States to reach an agreement on the excise duty levels applicable to heated tobacco products will partly determine the coherence and ambition of the European tobacco control policy in the years to come.

A substantial increase is being considered for heated tobacco

As part of the revision of the European directive on tobacco taxation, the European Commission proposed fully integrating heated tobacco products into the harmonized excise duty regime, with a minimum rate corresponding to 55 % of the retail price. The initial draft also included a tax threshold expressed in euros per kilogram, set at €155/kg. The Danish Presidency of the Council subsequently presented a significant strengthening of these parameters in documents submitted at the end of November. The new proposed excise duty floor for heated tobacco would be raised to €360/kg, more than double the initially envisaged level. This increase would be accompanied by the maintenance of a minimum rate of 55 % of the retail price, with the removal of the option allowing for a minimum amount per unit.

However, this approach, based on taxation per kilogram, presents several difficulties, as Smokefree Partnership points out. The proposed method relies on the assumption that a heated tobacco stick weighs 0.70 g, whereas, according to the compromise text from the Danish Presidency, the most common stick on the market actually contains approximately 0.30 g of tobacco. This overestimation has a direct impact on taxation: applied to the actual weight declared by manufacturers, the tax per kilogram results in a significantly lower excise duty level than that obtained with taxation per unit. The document shows that, for 1,000 sticks, taxation by weight at the initial rate of €155/kg amounted to only €46.50, compared to €108 when applied per unit. This discrepancy led the Presidency to propose raising the minimum to €360/kg in an attempt to align the two systems, while removing the floor expressed per 1,000 sticks and retaining only the weight-based basis.

This approach, however, assumes product homogeneity that does not reflect the market's diversity, and it may encourage optimization strategies based on reducing the weight of tobacco sticks. Furthermore, it maintains a significant tax advantage for heated tobacco: despite the adjustment to €360/kg, these products remain taxed considerably less than manufactured cigarettes, for which the EU imposes a minimum of €215 per 1,000 cigarettes as well as an overall excise duty representing at least 63% of the weighted average price. This tax differential creates a documented risk of a shift in consumption towards heated products, comparable to that observed in the past between manufactured cigarettes and rolling tobacco.

The WHO and several anti-tobacco organizations, such as the CNCT and the Smokefree Partnership, recommend prioritizing unit taxation to avoid these distortions and ensure better comparability with combustible cigarettes, which are generally designed to offer an equivalent use. Adopting a system based on kilograms could therefore limit the effectiveness of the measure and undermine the desired consistency of tax harmonization.

Such changes would superficially bring the taxation of heated tobacco closer to that of combustible tobacco, but without reaching the excise duty levels applied to manufactured cigarettes, which remain the most protective benchmark in terms of public health. Despite the proposed increase, heated tobacco products would remain significantly cheaper than traditional cigarettes, maintaining a substantial price difference. This situation also aligns with the preferences of the tobacco industry, which seeks to preserve the relative attractiveness of these products in order to support their expansion in the European market.

The proposed increase in taxes on heated tobacco is part of a broader overhaul of all European excise duties, which also includes a significant increase in the minimum taxes for cigarettes, rolling tobacco, and cigars or cigarillos. However, even within this overall framework, heated tobacco would continue to benefit from a more advantageous tax position. The application of these new tax provisions would indeed lead to an increase in the price of heated products, but without calling into question their status as significantly cheaper than manufactured cigarettes. This price difference remains crucial for the industry due to the high profit margins it makes on these products, which discourage many smokers from quitting altogether because of the harm reduction rhetoric promoted by manufacturers. Added to this is the attractiveness of these products, both in terms of price accessibility and marketing that promotes trendy devices.

Contrasting reactions between member states

While several member states support an overall strengthening of tobacco taxation, discussions surrounding heated tobacco highlight clear divisions within the Council. On one side, a group of countries advocates for a significant increase in excise duties to reduce the accessibility of all tobacco products and limit the industry's circumvention strategies. On the other, some states are particularly reluctant to support the "super-tax."«[1] on heated tobacco, citing the need to maintain a price differential with conventional cigarettes, to protect an alleged "harm reduction" role, or to prevent an increase in illicit trade.

These reserves largely originate from countries where the tobacco industry, and in particular Philip Morris International, has developed a significant industrial and commercial presence around heated tobacco and new nicotine products. These countries host production facilities or strategic investments dedicated to these products, which strengthens the manufacturers' economic and political influence in the national debate. In this context, national positions often emphasize arguments for a "transition" or "modernization" of the market, stressing the role of heated products as alternatives to smoked tobacco and the perceived risks of excessive taxation.

The growing role of civil society

As part of the review of the tax directive, several NGOs, such as the coalition Smokefree Partnership, They advocated for an ambitious policy of increasing excise duties on all tobacco products, with the associated objective of reducing consumption in line with the goals of a Tobacco-Free Europe. Furthermore, health organizations are calling for an upward harmonization of tobacco product taxation, similar to the taxation of manufactured cigarettes. Thus, with regard to heated tobacco mini-cigarettes, the challenge is to achieve an equivalent level of taxation to prevent these products from benefiting from a price advantage that could make them loss leaders and foster new addictions. Health stakeholders emphasize that taxation is one of the most effective levers for reducing consumption and also for limiting the commercial expansion of new products, many of which still only partially documented pose health risks. The recommendations thus emphasize regulatory consistency: bringing the taxation of heated products closer to that of conventional tobacco products would better reflect their environmental impacts, the risks associated with nicotine addiction and the importance of a comprehensive approach covering the entire market.

Several observers note that the Danish Presidency of the Council and the European Commission have adopted some of these guidelines, particularly regarding the increase in the excise duty floor on heated tobacco. This observation fuels a debate on the role of public health organizations in the European decision-making process. While their expertise in health and prevention is widely recognized, some Member States believe that discussions have sometimes given undue weight to the recommendations of public health organizations, to the detriment of a compromise that takes into account all national priorities. This perception, however, largely reflects a long-standing narrative promoted by the tobacco industry, which seeks to portray civil society as an influential actor, while in reality the most structured interactions and the most significant means of exerting pressure originate from the manufacturers themselves. In European debates on taxation, advocacy efforts by NGOs remain transparent, public and focused on health imperatives, while manufacturers have considerable resources, a strong industrial presence in several Member States and national relays that directly influence government positions.

Those involved in tobacco control also point out that the increased role of NGOs is in line with Article 4.7 of the WHO Framework Convention on Tobacco Control, which states that "the participation of civil society is essential to achieving the objective of the Convention and its Protocols." However, this same treaty, ratified by the European Union and all its Member States, requires countries and public institutions to protect their public policies from interference by the tobacco industry. In this context, enhanced civil society participation is presented as essential to ensuring the contribution of genuine scientific expertise, transparency in the regulatory process, and to counterbalance the massive and persistent lobbying of manufacturers.

©Generation Without Tobacco

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[1] Colin Stevens, Danish Presidency and European Commission push 'super tax' on heated tobacco as NGO influence overrides member state concerns, Eureporter, published on December 2, 2025, accessed on the same day