EU Proposes Drastic Tobacco Tax Hike, Including 1,092% Increase on Cigars
The European Commission has unveiled a sweeping proposal to raise tobacco taxes, including a dramatic increase in the minimum tax rate on cigars. If passed, the plan could reshape the cigar market across the EU.
On Wednesday, July 16, the European Commission (EC) formally presented its long-anticipated proposal to overhaul tobacco taxation across the European Union (EU). Among the changes is a staggering 1,092% increase in the minimum tax rate for cigars—a move that, if adopted, would have serious consequences for manufacturers, retailers, and consumers alike.
The proposal, which must be approved unanimously by all 27 EU member states, outlines sharp increases across all tobacco categories:
Cigars/cigarillos: from €12/kg to €143/kg or per 1,000 units
Cigarettes: from €90 to €215 per 1,000 units
Roll-Your-Own (RYO) tobacco: from €60 to €215
Other smoking tobacco: from €22 to €143 per kg
Hookah tobacco: from €22 to €107 per kg
Nicotine pouches: €143 per kg (new tax)
Heated tobacco: €108 per kg or 1,000 units (new tax)
Vaping liquids: €0.36/ml (over 15mg nicotine), €0.12/ml (under 15mg nicotine)
While this is still in the proposal stage, the European Cigar Manufacturers’ Association (ECMA) has expressed serious concerns. Paul Varakas, ECMA’s director general, said in a statement:
“This proposal is very worrying. It goes against every commitment the EU Executive has made recently regarding reducing the regulatory burdens for SMEs and midcaps, companies that are largely dominating the cigar segment, as opposed to other products manufactured by Big Tobacco.”
Interestingly, the proposal includes new EU revenue streams, adding another layer of complexity. One of these is the Tobacco Excise Duty Own Resource, which would require member states to contribute 15% of their tobacco tax revenues directly to the EU. In practice, this means if the minimum cigar tax is €143/kg, only €121.55 would remain with the country; the rest (€21.45) would be allocated to the EU budget.
Countries with low current tobacco tax rates, such as Spain, Malta, Luxembourg, Hungary, and Slovenia, would be most affected. Spain, notably, is the second-largest global market for Cuban cigars, due in large part to its favourable tax structure—currently 15.8% of retail price or €47 per 1,000 cigars. If enacted, Spain’s rates would need to more than triple.
Although many EU countries already exceed the proposed minimum rates and may not need to adjust, the combination of increased taxation and mandatory EU contributions has sparked early resistance. Sweden has already voiced opposition to the 15% revenue-sharing requirement, hinting at the difficult road ahead for this legislation.
The coming months will be critical as the proposal enters a comment period and faces intense scrutiny from both national governments and the tobacco industry. If even one country vetoes the plan, it cannot proceed. However, if passed, it could mark the most significant regulatory shift in the EU tobacco sector in decades.
