Key Points
- The revision is slated to apply from 2028, with a transition period of up to four years.
- First-ever coordinated EU tax treatment for heated tobacco, e-liquids, and nicotine pouches; raw tobacco to be tracked under EMCS.
- TEDOR would assess 15% of the tobacco excise base as an EU own resource, raising ~€11 bn (≈US$12.92 bn) per year.
- Illicit consumption remains high in France and the Netherlands, while Greece and Italy show signs of improvement.
- Open opposition from Sweden and Portugal; southern European growers warn of employment impacts.
- Adoption requires unanimity in the Council, implying a difficult negotiation path.
2Firsts, September 28, 2025 — According to EUReporter, the European Commission’s latest proposal to revise the Tobacco Tax Directive (TTD) is drawing strong opposition from multiple sides. Member states and industry groups argue the plan could “hit rural economies,” fuel illicit trade, and potentially open space for China to expand control over parts of Europe’s tobacco supply chain.
Under the proposal published in July 2025, the revised directive would apply from 2028, with a transition period of up to four years. It would raise the EU’s minimum harmonized excise levels and, for the first time, set coordinated tax rates for heated tobacco, e-liquids, and nicotine pouches.
A new feature of the revision is the inclusion of raw tobacco in the EU framework. Although the minimum excise for raw tobacco would be set at €0/kg (to avoid double taxation), movements of raw tobacco would be brought under the Excise Movement and Control System (EMCS), enabling customs to track and supervise supply from the initial processing stage.
At the same time, the proposed Tobacco Excise Duty Own Resource (TEDOR) would apply a uniform 15% assessment to member states’ tobacco excise base as an EU own resource, expected to contribute roughly €11 billion (US$12.92 billion) per year to the EU budget.
In its impact assessment, the Commission argues that tax coordination would reduce cross-border arbitrage and strengthen oversight. However, industry research warns that sudden price shocks may stimulate illicit trade. Recent data highlight the challenge: in France, illicit consumption in 2024 was about 38%, equivalent to 18.7 billion cigarettes; in the Netherlands, the share of untaxed cigarettes nearly doubled in two years, from 15% in 2021 to 25% in 2023. By contrast, Greece’s illicit share fell by more than six percentage points to 17.5% in 2024—the largest drop in a decade—while Italy also reported modest improvement, which analysts attribute to a combination of enforcement measures and cross-border cooperation.
Political resistance is already visible. Sweden—whose EU accession treaty includes a derogation for snus—has strongly opposed the plan. Finance Minister Elisabeth Svantesson called the proposal “completely unacceptable,” particularly objecting to the treatment of nicotine pouches, which enjoy strong domestic demand. Portugal likewise issued a statement expressing “serious concerns,” including over TEDOR’s requirement to transfer 15% of tobacco excise receipts to the EU budget.
Growers and producers in southern Europe warn of economic harm. The Commission estimates that about 26,000 professional growers remain active across 12 member states; earlier studies put related farm employment at around 80,000 across the EU. Italy, Spain, Greece, and Poland remain major producers. By comparison, China’s annual leaf output exceeds 2 million tonnes—far above the EU’s roughly 140,000 tonnes. European farmers argue that tighter controls and higher tax burdens would further weaken competitiveness and erode support under the Common Agricultural Policy (CAP). Italian MEP Riccardo Augusto Marchetti warned that “tens of thousands of livelihoods are at risk,” urging governments to speak up for growers and small businesses.
For its part, the Commission defends the measures as updating the TTD to address public-health challenges and significant market changes, modernizing single-market rules. A spokesperson said the revised directive is intended to apply from 2028, with up to four years of transition for certain products to allow national adjustment.
Looking ahead, because tax legislation requires unanimity in the Council, the reform faces a difficult political path. The Commission aims to reach agreement ahead of the 2028 application date, but strong opposition from some member states could delay or dilute the package. The ongoing debate seeks to balance public-health goals with the risks of economic damage and illicit trade—a dilemma that has complicated EU tobacco policy for decades.
