EU proposes new taxation guidelines for e-cigarettes

Nov.28.2022
EU proposes new taxation guidelines for e-cigarettes
The EU plans to include new tobacco products in the tax category, with a minimum tax on e-liquids based on nicotine concentration.

The London-based news center 2FIRSTS has learned that several European and British media outlets, such as the Financial Times on November 28, reported that the European Union may propose to amend the current 2011 EU tobacco taxation directive.


A London-based journalist from 2FIRSTS News Center conducted interviews with insiders in the European electronic cigarette industry to gather information. The findings are as follows:


The European Commission is working on a proposal to include new tobacco products, such as e-cigarettes and heated tobacco products, in the tax framework for traditional cigarettes.


The European Commission is set to impose a minimum consumption tax on electronic cigarette liquid, with the tax rate based on the nicotine concentration of the liquid.


Each member state can choose to use a pricing-based tax, a quantity-based tax, or a combination of both for taxing. The minimum consumption tax rate depends on the nicotine concentration of cigarettes and must not be lower than:


Nicotine levels below 15mg/ml will be subject to a retail tax of 20% or €0.10/ml, while nicotine levels above 15mg/ml will be subject to a retail tax of 40% or €0.30/ml. The maximum retail price should include all of these taxes. The minimum tax will be adjusted based on the purchasing power parity of each member country, using a specific formula.


The equation RateMS(t) is calculated as two-thirds the rate of the European Union plus one-third of the rate of the European Union multiplied by the previous year's Percentage of the Labor Force in Industry, Manufacturing, and Construction (PLIMS) divided by 100.


RateMS(t) is the adjusted tax rate for a given year (t) in each member country.


RateEU is the standardized EU consumption tax rate.


PLIMS(t-1) refers to the Price Level Indices of each member country in the previous year (t-1), as shown in the chart below.


The EU Consumer Price Index for the year 2021, sourced from the European Commission.


According to these standards, the minimum tax range for nicotine levels of <15mg/ml of e-liquid this year is €0.085/ml (Romania, PLI2021=55.5) and €0.113/ml (Denmark, PLI2021=140.3).


This tax rate will be adjusted on a three-year cycle.


After the release of the draft guidance on taxation, it will be reviewed and revised by the European Council. It can only be approved for implementation after all EU member states have unanimously agreed to it.


The review and modification of the draft will also take into account the opinions or suggestions for amendments from the European Parliament, but they are not binding.


It is reported that the European Commission will propose a revised version of the draft on December 7, 2022.


Taking the example of a 10ml e-liquid product with a nicotine concentration of 20mg/ml on the German online e-cigarette retail platform Innocigs, the current retail price is 8.95€ (including a 20% value-added tax).


Source: innocigs.com


According to a calculation by 2FIRSTS (subtracting existing taxes and adding new taxes, all other conditions remaining the same), the retail price of the product (to EU standards) would be 9.84€ (calculated with a 40% retail tax) or 10.63€ (calculated with a volume tax of 0.3€/ml).


In addition, the European Commission has implemented a ban on flavored heated tobacco products on the 25th of this month in order to curb the increasing demand from young consumers.


To further strengthen coverage of the European electronic cigarette industry news, 2FIRSTS has established a news center in London and will continue to monitor the latest developments in the local electronic cigarette industry, providing exclusive updates. Stay tuned for more information.


Author/Zhu Hongxu


Recommended Reading:


The European Union has banned flavored heated tobacco products.


2FIRSTS establishes London news center.


In a recent report, 2FIRSTS connected with the Medicines and Healthcare products Regulatory Agency (MHRA), which revealed that 25% of electronic cigarettes currently on the market do not comply with regulations.


FIRSTS connects with UKVIA: Suggests UK Government Raise E-cigarette Capacity Limit to 5ml.


Reference:


Law to modernize tobacco tax law (Tobacco Tax Modernization Law - TabStMoG)


The taxes levied on tobacco products, commonly referred to as excise duties.



Disclaimer

This article is provided solely for professional research, industry discussion, and informational purposes. Any references to brands, companies, products, technologies, or policies are made for factual reporting and analytical purposes only, and do not constitute endorsement, recommendation, promotion, or advertising by 2Firsts.

Nicotine-containing products, including but not limited to cigarettes, e-cigarettes, heated tobacco products, and nicotine pouches, carry significant health risks. Readers are responsible for complying with all applicable laws and regulations in their respective jurisdictions, including age restrictions and access limitations.

The information contained in this article should not be regarded as investment, legal, medical, regulatory, or commercial advice. While 2Firsts strives to ensure the accuracy and reliability of its content, it does not assume liability for any direct or indirect loss arising from errors, omissions, inaccuracies, or reliance on the information contained herein.

This article is not intended for individuals below the legal age for accessing tobacco or nicotine-related information in their jurisdiction.

 

Copyright Notice

This article is either original content produced by 2Firsts or content reproduced, translated, summarized, or adapted from third-party sources with attribution where applicable. The intellectual property rights of the original content remain with 2Firsts or the respective original rights holders.

No individual or organization may copy, reproduce, distribute, republish, modify, translate, or otherwise use this content without prior authorization. Any unauthorized use may result in legal action.

For copyright-related inquiries, corrections, or removal requests, please contact: info@2firsts.com.

 

AI-Assisted Translation and Editing Notice

Portions of this article may have been translated, edited, or reviewed with the assistance of artificial intelligence tools to improve efficiency and readability. Due to the limitations of AI-assisted translation and editing, discrepancies, omissions, or inaccuracies may exist when compared with the original source.

Where applicable, readers are advised to refer to the original source for the most complete and accurate information. If you identify any errors or believe that any content infringes upon your rights, please contact us at info@2firsts.com, and we will review and address the matter promptly.

U.S. Customs Plan to Require Foreign Export Declarations Could Deal ‘Devastating’ Blow to China’s Vape Exports, Logistics gl Expert Says
U.S. Customs Plan to Require Foreign Export Declarations Could Deal ‘Devastating’ Blow to China’s Vape Exports, Logistics gl Expert Says
A U.S. Customs and Border Protection proposal to collect foreign export declarations and other overseas customs documents could expose discrepancies in the value, classification and description of China-made vape shipments entering the United States. A veteran Chinese logistics professional told 2Firsts that the measure, if implemented, could undermine the all-inclusive shipping model used by some unauthorized vape exporters and push parts of the trade toward costlier underground channels. The risk extends beyond higher duties: accurately declared products may also be more readily identified as unauthorized e-cigarettes subject to FDA enforcement.
Special Report
Sep.07
RLX Technology Dropped From FTSE All-World as International Business Reaches 68.5% of Q2 Revenue
RLX Technology Dropped From FTSE All-World as International Business Reaches 68.5% of Q2 Revenue
RLX Technology (NYSE: RLX) has been removed from the FTSE All-World Index, effective September 21. FTSE Russell records show RLX was already part of its global equity index universe by 2022, when its American depositary receipts were classified as China Large Cap securities. Trading volume rose to about 44.77 million shares on September 18, roughly 23 times the previous session's volume. RLX reported RMB1.0105 billion in second-quarter revenue, up 14.8% year over year, with international operations contributing 68.5%. The company also acquired a 51% stake in one of Western Europe's largest distributors of next-generation smoke-free and FMCG products in July.
Sep.22
Product | PMI Launches TEREA Black Mint Pearl in Japan, Adding First Capsule Variant to Black Range With Nationwide Rollout From October 19
Product | PMI Launches TEREA Black Mint Pearl in Japan, Adding First Capsule Variant to Black Range With Nationwide Rollout From October 19
Philip Morris Japan (PMJ) launched TEREA Black Mint Pearl on October 15, 2026, introducing the first capsule-equipped heated tobacco stick in the TEREA Black range for IQOS ILUMA devices. The product combines a strong menthol profile with a crushable mint capsule and is priced at ¥640 per 20-stick pack, including tax. Sales began at four IQOS stores and selected retail partners on October 15, with distribution expanding to convenience stores and other tobacco retailers nationwide from October 19. The launch brings Japan's TEREA portfolio to 28 variants, including 21 menthol-related products, or 75% of the range.
product
Oct.16 by 2Firsts Perspectives
Philippines BIR Steps Up Illicit Vape Enforcement Ahead of Christmas Shopping
Philippines BIR Steps Up Illicit Vape Enforcement Ahead of Christmas Shopping
The Philippines’ Bureau of Internal Revenue is intensifying enforcement against illicit vape and tobacco products ahead of the Christmas shopping season, directing regional and enforcement offices to strengthen monitoring of production sites, warehouses, distribution channels and retail outlets. The BIR destroyed 240,550 illicit vape products in August with an estimated tax liability of about PHP1.53 billion. A nationwide tax-compliance operation in July also inspected 3,590 businesses involved in tobacco and vapor products.
Regulations
Sep.17 by 2Firsts Perspectives
Arizona Turns to a 50% Retail Vape Tax as Tobacco Tax Revenue Falls 47% From 2008
Arizona Turns to a 50% Retail Vape Tax as Tobacco Tax Revenue Falls 47% From 2008
Arizona's First Things First is pushing for an excise tax equal to 50% of the retail price of vaping products, estimating that the measure could generate about $100 million annually. The agency says its tobacco-tax revenue has fallen 47% from 2008 levels. Arizona has attempted to broaden its nicotine tax base in each of the past two years: a 2025 bill proposed a 50% wholesale-price tax, while a 2026 measure shifted to a 50% retail-price tax covering alternative nicotine products and vapor products. Separately, the state enacted HB 4001 this year to establish a new licensing and sales framework for alternative nicotine products.
Sep.21
Swedish Match Faces Broader Labeling Order After ZYN Inspection, Documents Obtained by 2Firsts Show
Swedish Match Faces Broader Labeling Order After ZYN Inspection, Documents Obtained by 2Firsts Show
Documents obtained by 2Firsts show that Sweden's Public Health Agency ordered Swedish Match to revise ingredient labels beyond the five ZYN products inspected. The dispute centers on whether flavoring ingredients must be individually disclosed, with Swedish Match citing trade-secret protection and the regulator insisting on full ingredient disclosure. The company faces a conditional penalty of SEK 2 million per month for noncompliance. As of October 22, the agency had received no appeal, despite the company's stated intention to challenge the decision.
Oct.22