EU Proposal Could Significantly Raise Cigar Taxes Across Several Countries

A leaked draft shows the European Commission is considering a dramatic tobacco tax hike, which could force several EU countries—including major cigar markets like Spain—to significantly increase cigar taxes.

A newly leaked draft from the European Commission (EC) reveals sweeping proposals to amend the Tobacco Excise Directive, which would drastically increase the minimum tax levels for cigars and other tobacco products across the European Union (EU). While some member states already surpass these proposed minimums, others, particularly Spain—a crucial hub for premium cigars—could be deeply impacted.

According to Politico, the draft proposes raising the minimum tax on cigars and cigarillos from €12 per kg to €143 per kg or 1,000 units. The increase would also affect cigarettes, roll-your-own tobacco, hookah tobacco, and newer products like nicotine pouches and vaping liquids. Notably, the EC also proposes, for the first time, excise duties on heated tobacco and e-liquids.

Although these are minimum tax thresholds, and many countries already exceed them, the new rates would still force substantial increases in countries like Hungary, Luxembourg, Malta, Slovenia, and most notably Spain—the second-largest seller of Cuban cigars worldwide. Spain’s current cigar tax stands at just 15.8% of the retail price or a minimum of €47 per 1,000 units.

Paul Varakas, Director General of the European Cigar Manufacturers’ Association (ECMA), responded strongly, calling the proposed rates “a complete misunderstanding from EU bureaucrats on the realities of the cigar market.”

“Cigars have specific production and consumption patterns justifying a differentiated tax,” Varakas stated. “Cigar aficionados should not become the collateral damage of the introduction of new generation products on the EU market by Big Tobacco.”

Importantly, for this draft to be enacted, it must be approved unanimously by all 27 EU member states—giving any single country the power to veto.

While the timeline is not final, EC Tax Commissioner Wopke Hoekstra told Politico he hopes to see the proposal passed as early as this summer. Whether that happens remains to be seen, but the implications for both retailers and cigar smokers across the EU could be profound.