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.

Germany Seizes 56 Pallets of Illegal Vapes, Probe Estimates €1.8 Million Tax Loss
Germany Seizes 56 Pallets of Illegal Vapes, Probe Estimates €1.8 Million Tax Loss
German authorities have seized dozens of pallets of illegal disposable vapes in a criminal investigation, with the products estimated to have caused at least €1.8 million in tax losses. The case has also raised concerns over cross-border supply chains linked to unauthorized nicotine products entering the European market.
Jul.14
Exclusive: China Tobacco Launches Locally Made MODEN FREE Nicotine Pouches in Indonesia
Exclusive: China Tobacco Launches Locally Made MODEN FREE Nicotine Pouches in Indonesia
2Firsts exclusively reports that China Tobacco Zhejiang Industrial has launched MODEN FREE nicotine pouches in Indonesia. The locally manufactured product is sold through Sixhill, a next-generation tobacco channel under CFU Group, at about $1.80 per 18-pouch can. The launch moves China Tobacco’s nicotine pouch activity beyond trade-show displays and testing into local production and public retail.
Jul.16
Product | PMI Japan Expands ZYN by IQOS Strength Portfolio With Strong Series, Increasing Lineup to 12 Products
Product | PMI Japan Expands ZYN by IQOS Strength Portfolio With Strong Series, Increasing Lineup to 12 Products
Philip Morris Japan (PMJ) has expanded the ZYN by IQOS oral tobacco pouch portfolio in Japan with four new ZYN Strong products, adding a third intensity level alongside the existing Low and Medium ranges. The Strong series first entered selected duty-free channels in Japan on July 1, 2026, before expanding to IQOS stores, the ZYN Online Store and selected tobacco retailers from August 18. The expansion increases the Japanese ZYN by IQOS lineup from eight to 12 products.
Aug.20
Nasdaq-Listed Vape Company iSpire Technology Restructures Leadership as Tuanfang Liu Becomes Sole CEO, BTIG Initiates Coverage on ODM Growth Opportunity
Nasdaq-Listed Vape Company iSpire Technology Restructures Leadership as Tuanfang Liu Becomes Sole CEO, BTIG Initiates Coverage on ODM Growth Opportunity
Nasdaq-listed vape company iSpire Technology has restructured its leadership team, with Tuanfang Liu becoming the company’s sole chief executive officer (CEO) and Michael Wang appointed CEO of Aspire North America. The move ends iSpire’s previous co-CEO structure and creates clearer responsibilities between group strategy and regional execution. Separately, BTIG initiated coverage on iSpire Technology with a Buy rating and a $3.50 price target, identifying ODM growth opportunities as a key investment factor.
Jul.27
Russia Adds Vapes to “Strategic Goods” List, Illegal Cross-Border Trade Faces Up to Five Years in Prison
Russia Adds Vapes to “Strategic Goods” List, Illegal Cross-Border Trade Faces Up to Five Years in Prison
Russia will place e-cigarettes and related nicotine products under its “strategic goods” framework from August 20, 2026. According to TVP World’s report published on August 19, the newly listed items include e-cigarettes, electronic smoking devices, vape liquids and nicotine salts. Individuals who illegally move these products across Russia’s customs border or its state border with other Eurasian Economic Union (EAEU) members could face up to five years in prison if shipment values exceed 100,000 rubles (about €1,000), provided all elements of a criminal offence are established.
Aug.20
Imperial Brands Plans Thousands of Job Cuts Across U.S. and Europe in Cost Restructuring
Imperial Brands Plans Thousands of Job Cuts Across U.S. and Europe in Cost Restructuring
According to Reuters, citing Bloomberg News, British tobacco company Imperial Brands PLC plans to cut thousands of jobs across the United States and Europe as part of a cost reduction and organizational restructuring effort. The announcement drew market attention to the company’s shares. The move comes as global tobacco companies continue adjusting their operations amid slower cigarette market growth, changing consumer preferences and the transition toward next-generation nicotine products.
Aug.11