Revision of the European directive on tobacco taxation: Ireland aims for an agreement by November 2026

After several months of discussions and unsuccessful attempts to reconcile national positions, the Irish Presidency of the Council of the European Union intends to revive the adoption of the new Tobacco Tax Directive (TTD).[1]. Dublin hopes to reach an agreement at the Economic and Financial Affairs Council (ECOFIN) meeting scheduled for November 9, 2026. The Irish Presidency intends to use the technical work to identify the remaining sticking points and submit a compromise to the ministers. A meeting of the High-Level Group on Taxation, scheduled for October 26, should allow national delegations to examine the latest version of the text and determine whether a political agreement is feasible.

This initiative comes after several months of negotiations, during which the previous Cypriot presidency attempted to bridge the gap between member states' positions, notably by proposing concessions on minimum tax rates and their automatic adjustment in line with inflation. These attempts failed to garner sufficient support. The main obstacle remains the unanimity rule applicable to European decisions on taxation, as a single national objection could prevent the text's adoption. The Irish presidency must therefore find a compromise acceptable to all 27 member states, while several governments maintain reservations about the reform's economic and fiscal consequences, echoing the arguments of the tobacco and nicotine lobbies.

A reform aimed at bringing tobacco taxation closer to the topic and encompassing new nicotine products.

The European Commission wishes to update the minimum tax rates applicable to tobacco products. Furthermore, the revision of the directive responds to the evolution of the European market, characterized by the development of products not covered by the existing tax framework. The Commission's proposal aims to extend the tax system to several categories of nicotine-containing products. In this respect, the text concerns cigarettes and other already regulated tobacco products, heated tobacco, raw tobacco, e-cigarette liquids, and nicotine pouches. It aims to harmonize national tax structures and limit disparities in treatment between comparable products. The text also includes classification rules designed to reduce differences in interpretation between tax authorities. When a product falls into several categories, the category corresponding to the highest harmonized minimum rate would be applied. The objective is to prevent differences in national classification from allowing certain products to benefit from more favorable tax treatment.

Transitional periods are also envisaged for Member States whose current tax levels are below the new thresholds. According to the details still under discussion, the increases could be phased in between 2028 and 2030, with adjustment periods extending until 2035 for certain product categories. The proposed timetable anticipates adoption of the reform before the end of 2027, so that the new framework can begin to apply on January 1st.^er January 2028. The European Commission could also commit to publishing periodic evaluations, every five years from December 2032, to examine the functioning of the system and its effects on the internal market.

Sweden, with its close ties to the tobacco and nicotine lobbies, is a key player in the negotiations.

Sweden is among the member states most reluctant to adopt the project. Swedish authorities particularly wish to preserve the tax treatment of snus., an oral tobacco product authorized for sale only in Sweden and promoted by the tobacco lobby as an example of the "Swedish model" for reducing Cigarette consumption is a concern. However, tobacco manufacturers, who have a significant presence in Sweden, have launched nicotine pouches that they intend to sell on a massive scale with minimal regulation. These products are already banned in some EU member states, such as France, Belgium, and the Netherlands. The positions of the various Swedish political forces on these addictive products, particularly regarding the protection of young people, could influence the stance of the future government. The domestic political context adds another layer of difficulty. Following the elections of September 2026, Sweden still lacks a new government, after the failure of an initial attempt to form an executive. This situation limits the authorities' ability to make politically binding decisions on such a sensitive issue.

Stockholm has reportedly informed the Council Presidency of its preference for postponing the decision. Abstention is also being considered, but this would not block the adoption of the text: in a procedure requiring unanimity, an abstention does not constitute formal opposition. However, Sweden does not want a decision to be taken without a new government being able to assume the political consequences. Ireland's ability to address Swedish concerns will therefore be crucial for adhering to the planned timetable. The other member states are reportedly willing to examine the text at the November meeting.

Spain is calling for a more moderate increase in minimum interest rates.

Spain is also among the countries that want to adjust the pace and level of the planned tax increases. The Commission's initial proposal aims to reduce differences between national tax systems and gradually bring tax levels for different product categories closer together. The Commission plans, in particular, to take into account the economic situation of Member States and general price levels when determining minimum thresholds. Madrid fears that an excessive increase in European minimum rates will reduce price differences between Spain and its neighbors, especially France. Spain benefits from tax disparities through cross-border purchases inflated by manufacturers. Spanish concerns also extend to rolling tobacco, specifically loose tobacco, also known as "picadura.".

In its argument, Spain maintains that indicators based on average income do not always reflect disparities in purchasing power within a single country, particularly between urban and rural areas. Madrid therefore advocates for a more gradual implementation of tax increases to limit their impact on the most price-sensitive consumers. In this respect, Spain's position underscores how the public health objectives that guided the revision of the current tax directive appear to have vanished from the negotiations.

However, the WHO recognizes strong, continuous, and harmonized tax increases across products and countries as one of the most effective ways to prevent or stop smoking, especially among young people and those in precarious situations, who are the most affected by price increases. Furthermore, according to the Tobacco Atlas, the annual cost of smoking-related illnesses reaches €17.4 billion in Spain, far exceeding the revenue from these products.

Adoption still depends on the unanimous agreement of the Council

The European Commission presented its proposal for revision on July 16, 2025.. The text is examined according to a special legislative procedure applicable to the harmonization of taxes, based on Article 113 of the Treaty on the Functioning of the European Union. In this procedure, the Council of the European Union must decide unanimously, after consulting the European Parliament and the European Economic and Social Committee.

Several steps remain necessary before the reform can come into force: finding a compromise between Member States on minimum rates, their evolution, the products concerned and the transitional periods; examining any remaining disagreements by the permanent representatives of the Member States within Coreper; obtaining unanimous agreement from the ministers in the Council; finalizing the legal and linguistic aspects of the text, followed by its formal adoption and publication in the Official Journal of the European Union; and finally implementing the provisions in national legislation within the prescribed time limits.

If the text is substantially amended, a new consultation with Parliament may also be required. The immediate challenge for the Irish Presidency is therefore to reach a compromise on minimum rates and implementation details, while addressing the concerns of countries such as Sweden and Spain. The ECOFIN meeting on November 9 will be a crucial milestone, but the adoption of the directive remains uncertain until unanimous agreement is reached among the Member States.

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[1]Alvaro Villarroel, The last cigarrillo of the discord: Ireland quiere cerrar in November the new tax status of tobacco, Democrata, published on October 22, 2026, accessed the same day

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