European Commission considers raising taxes on tobacco and nicotine

The European Commission, The government, led by Ursula von der Leyen, is considering a 258 % increase in the tax on rolling tobacco and a 139 % increase on cigarettes, according to an impact study obtained by Politico.[1]The 196-page document presents three scenarios, but the Commission favors the one that predicts the largest increases, which would generate €15.1 billion in additional tax revenue and is likely to reduce smoking prevalence in the Union.

Towards a significant increase in taxes on tobacco products

Under this option, the fixed tax on consumption duties on cigarettes would increase from €90 to €215 per 1,000 units, while that on rolling tobacco would increase from €60 to €215 per kilogram. Cigars and cigarillos would also be included, with a massive increase of €1,092, from €12 to €143 per kilogram.

For water pipe tobacco, known as shisha and mainly imported, the tax mentioned is lower than that of cigarettes, at 107 euros per kilogram.[2].

In practice, the impact will not be the same for all member states because their purchasing power index will be taken into account. According to Euractiv's calculations, a pack of cigarettes in Luxembourg, which has high purchasing power, would increase by 60 % (+€3.50). In countries with lower purchasing power, the increase in the price of a pack would be +€2 per pack in Greece (+50 %) and +€2.60 in Bulgaria (+80 %).

The document highlights that tobacco taxation is the most effective measure to reduce tobacco consumption, which kills 700,000 EU citizens prematurely each year. The document reveals that 40% of the decline in smoking in the EU over the last decade is attributable to these steep tax increases.

"Higher tobacco taxes and prices have been shown to be the most effective measures to reduce overall tobacco consumption" and encourage smokers to quit or at least smoke less. ", explains the document[3].

New nicotine products finally included

The Commission also plans to introduce taxation on e-cigarettes and heated tobacco, responding to requests from many Member States. Sixteen countries, led by the Netherlands, sent a letter to the Commission in 2023 to denounce the tax disparities between countries, which undermine the proper functioning of the single market.

In March 2025, twelve health ministers urged the Commission to review all tobacco-related legislation, including taxation. Then, At the end of May 2025, an initiative of sixteen finance and economy ministers took place calling on the President of the Commission to " take the necessary steps to update the directive » on the taxation of tobacco products (TTD), which they claim has become obsolete in the face of the emergence of new nicotine products on the market, such as nicotine puffs and pouches.

Several European capitals believe that new nicotine products, such as e-cigarettes, are very popular with children and young people and should therefore be more strictly regulated. Their long-term health effects are still unknown, and the tobacco industry is trying to sell them as "less harmful" to compensate for the decline in sales of traditional tobacco products. The current directive on the taxation of tobacco products, dating from 2011, does not take these new uses into account.

Under the proposed reform, e-cigarettes containing more than 15 mg/ml of nicotine would be taxed at €0.36 per milliliter of liquid, while those below this threshold would be taxed at €0.12/ml. Nicotine pouches, whose flavors are subject to increasing restrictions in the European Union, are expected to be taxed at €143 per kilogram. Nicotine replacement products, such as nicotine gum (e.g., Nicorette), which are used as a smoking cessation aid, will continue to be subject to a separate regulation, that of medicinal products.[4].

European Tax Commissioner Wopke Hoekstra recently expressed his intention to adopt this revision of the directive by summer 2025.

The document judges that the consequences on employment will be marginal.

As for the impact of the proposed taxes on employment in the sector, the document concludes that it would be " marginal and concentrated in a handful of Member States ".

Indeed, the document explains that less than 4 % of the global annual tobacco crop is grown in the EU, while the number of EU growers in 2024, estimated at around 14,500-15,000, has declined since 2010; they represented 60,000 tobacco growers within the EU.

The largest number of tobacco producers is located in Bulgaria (around 6,200), followed by Greece (4,600) and Poland (3,500). Bulgaria is the most exposed Member State with a relatively high concentration of tobacco growers. Manufacturing is concentrated in Germany. ", indicates a footnote in the document.

The position of the Member States appears directly linked to the interests of the growers and manufacturers present and influential in the country. Italy, Greece, and Romania, for example, are calling for "caution" and have asked the Commission to introduce differentiated taxation for new products such as heated tobacco.

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[1]Eccles Mari, European Commission considers 258 percent tobacco tax hike, Politico, published June 12, 2025, accessed June 16, 2025

[2]Michalopoulos Sarantis, European Commission mulls 139% tax rise on cigarettes, says internal document, Euractiv, published June 12, 2025, accessed June 16, 2025

[3]Insajderi, Bad news for smokers: New EU plan to raise tobacco prices across Europe, published June 12, 2025, accessed June 16, 2025

[4]Gazetta Express, New EU plan hits smokers, cigarette prices set to rise across Europe, published June 12, 2025, accessed June 16, 2025

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