Dutch Ministry of Finance reports: Dutch tobacco tax revenue stagnates, mainly due to cross-border consumption shift

Key points:

·Tax revenue increase effect returns to zero: Netherlands had previously estimated that increasing taxes by 5 cents per pack of cigarettes could generate an additional revenue of 7 million euros, but now that expected amount has dropped to zero. 

·The tobacco tax revenue for both 2025 and 2026 is estimated to be 25 billion euros each, with no further plans for tax hikes. 

·Cross-border cigarette purchases are a key reason: Customs data shows that in 2024, 45% of seized cigarettes lacked the Dutch consumption tax stamp, with many of these cigarettes being purchased from low-tax countries, and over 10% being counterfeit products, which in turn lowers domestic cigarette sales. 

·Public health impact: Data from the National Institute for Public Health and the Environment in the Netherlands (RIVM) shows that after the last tobacco tax hike, 7% of smokers quit smoking, 22% reduced their smoking consumption, and about two-thirds of people attributed changes in behavior to the tax increase.

2Firsts, September 24, 2025 - According to a recent report by NL Times, the Dutch Ministry of Finance has announced that increasing tobacco taxes will no longer generate additional revenue for the government, largely due to the prevalence of cross-border cigarette purchases.

Previously, the Dutch Ministry of Finance estimated that increasing taxes on each pack of cigarettes by 5 euro cents could generate an additional revenue of 7 million euros for the treasury. However, this expected increase in revenue has now been reduced to zero.

The Ministry of Finance stated in the report that "Under the current levels of tobacco consumption tax, further tax increases are expected to lead to changes in public behavior, which will completely offset the additional tax revenue.

A spokesperson for Dutch State Secretary Eugène Heijnen explained the phenomenon by stating, "A decrease in smoking rates and a significant reduction in cross-border tobacco purchases have greatly decreased cigarette sales, with cross-border purchasing possibly being the main factor.

In 2025, the Dutch Ministry of Finance predicts tobacco tax revenues to be €25 billion, remaining steady in 2026. Currently, the excise tax on each pack of cigarettes is €7.81, and the government has no plans to further increase taxes.

Customs data support this claim. An analysis of seized cigarettes in 2024 showed that 45% of cigarette packages were lacking the Dutch consumption tax stamp, a figure that has been steadily increasing from 15% in 2021 and 25% in 2023. These unstamped cigarettes were mostly purchased from countries with lower tax rates, with over 10% being counterfeit products.

However, the increase in tobacco taxes has had a positive impact on public health. According to the Netherlands National Institute for Public Health and the Environment (RIVM), after the last tax hike, 7% of smokers chose to quit smoking and 22% of smokers reduced their smoking intake, with about two-thirds of them citing the tax increase as one of the reasons for changing their behavior.