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DRAFT REPORT (COM(2025)0580 – C100207/2025 – 2025/0580(CNS))

On the proposal for a Council directive on the structure and rates of excise duty applied to tobacco and tobacco related products (recast)

ECON-PR-784398

Committee on Economic and Monetary Affairs · Rapporteur: Tomáš Kubín

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This draft report proposes amendments to the Commission's recast directive on excise duty for tobacco products. It adjusts definitions, rates, and transitional periods, and adds provisions on indexation and impact assessments.

Committee position. The rapporteur proposes to approve the Commission proposal as amended, with changes to definitions, rates, and transitional periods to ensure proportionality and feasibility.

Key points

  1. Extends the title to include raw tobacco, aligning with the Commission's decision to apply the Excise Movement and Control System to raw tobacco.
  2. Merges cigars and cigarillos into one category, deleting the separate definition and the 3g weight threshold for cigarillos.
  3. Redefines waterpipe tobacco as smoking tobacco sold or intended for waterpipe use, closing a loophole that could allow lower taxation.
  4. Sets rules for counting heated tobacco items with higher tobacco content as multiple items for excise purposes.
  5. Broadens definitions of electronic cigarettes and nicotine pouches to close loopholes and simplify enforcement.
  6. Adjusts the indexation mechanism to use core inflation (excluding energy and unprocessed food) and caps adjustments at 12%, applying from 1 January 2036.
  7. Increases the weight of the price level index in calculating minimum rates from one third to one half.
  8. Lowers the minimum excise duty on cigarettes from 63% to 60% of the weighted average retail selling price.
  9. Prolongs transitional periods for cigars, cigarillos, heated tobacco, and other products by one year, with adjusted interim rates.
  10. Sets a single minimum excise duty for all e-cigarette liquids regardless of nicotine content: 40% of retail price or EUR 0.36 per millilitre.
  11. Reduces final minimum rates for nicotine pouches and other nicotine products from 2033.
  12. Requires the Commission to assess the impact of new rates on cigars and cigarillos SMEs and family-owned manufacturers within two years, and to propose adjustments if needed.

Who is affected

  • Manufacturers and importers of tobacco and nicotine products, especially those producing cigars, cigarillos, heated tobacco, and e-cigarette liquids.
  • Small and medium-sized enterprises and family-owned businesses in the cigar and cigarillo sector.
  • National tax authorities, which will apply new definitions and rates, and benefit from simplified enforcement for e-cigarettes.
  • Consumers, particularly low-income groups, who may be affected by tax changes and potential illicit trade.

Figures and deadlines

  • 60% of weighted average retail selling price for cigarettes, with a Union rate of EUR 215 per 1000 cigarettes.
  • EUR 274 per 1000 cigarettes for the derogation from the percentage requirement.
  • Transitional rates for heated tobacco: EUR 58 per 1000 items or EUR 83 per kilogram or 20% of retail price from 2028 to 2030.
  • From 2031 to 2032: heated tobacco at EUR 68 per 1000 items or EUR 97 per kilogram or 30% of retail price.
  • E-cigarette liquids: 40% of retail price or EUR 0.36 per millilitre.
  • Nicotine pouches: from 2030 at 20% or EUR 57 per kilogram; from 2033 at 35% or EUR 100 per kilogram.
  • Indexation cap of 12% and application from 1 January 2036.

Legal basis: Article 113 of the Treaty on the Functioning of the European Union