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.

Product | KT&G to Launch lil Tonino Lamborghini in South Korea, Bringing 3-Second Heat-Up to New HTP Platform
Product | KT&G to Launch lil Tonino Lamborghini in South Korea, Bringing 3-Second Heat-Up to New HTP Platform
KT&G will launch the lil Tonino Lamborghini heated tobacco device in Seoul on September 15, 2026. The product introduces a new heating technology called Flashwave Heating, which uses microwaves to heat tobacco sticks internally and delivers a manufacturer-rated heat-up time of about three seconds. The device features an all-metal aluminum body, a color display and a dedicated GUI, and launches alongside a new line of NAU tobacco sticks that are incompatible with existing lil consumables. Korean media describe the product as KT&G's first new heated tobacco platform since lil AIBLE was introduced in 2022.
Aug.31
South Korea Constitutional Court Upholds Volume-Based E-Liquid Tax, With Challenged Rates at KRW 370 and KRW 628 per Milliliter
South Korea Constitutional Court Upholds Volume-Based E-Liquid Tax, With Challenged Rates at KRW 370 and KRW 628 per Milliliter
South Korea's Constitutional Court has upheld fixed taxes on nicotine-containing e-cigarette liquids based on solution volume, ruling that challenged provisions imposing KRW 370 per milliliter in individual consumption tax and KRW 628 per milliliter in tobacco consumption tax do not violate the Constitution. The cases stemmed from historical disputes involving importers that reported nicotine as being extracted from tobacco stems rather than leaves. South Korea has since broadened its tobacco definition to include synthetic nicotine, while current tax laws provide reduced rates for certain products not derived from tobacco.
Sep.18
NAS 2026 | FDA CTP Director Says PMTA Pathway Is “Predicated on Tobacco Harm Reduction”
NAS 2026 | FDA CTP Director Says PMTA Pathway Is “Predicated on Tobacco Harm Reduction”
At the 2026 New Approaches Summit in New York, FDA Center for Tobacco Products Director Bret Koplow said the PMTA pathway is “predicated on tobacco harm reduction.” He outlined four CTP priorities: youth prevention, helping adults quit or switch to lower-risk products, improving relative-risk communication, and reducing unauthorized products. Koplow also addressed flavored e-cigarettes, public risk perceptions, industry credibility and efforts to make PMTA reviews more efficient and predictable.
Sep.26
As Regulators Focus on Nicotine Pouch Child Safety, Safeguard Pursues an External Packaging Route
As Regulators Focus on Nicotine Pouch Child Safety, Safeguard Pursues an External Packaging Route
As regulators pay closer attention to child safety in nicotine pouches, manufacturers face a practical challenge: how to strengthen child-resistant packaging without unnecessarily reworking products, production lines and regulatory submissions already in place. In a written interview with 2Firsts, Chemular detailed Safeguard’s external packaging approach, its customer-specific testing requirements and possible PMTA pathways. The model remains early-stage, but it offers a new way to think about an increasingly important regulatory and manufacturing issue.
Industry Insight
Sep.19
Couche-Tard Posts Double-Digit U.S. Same-Store Growth in Other Nicotine Products, Led by Pouches
Couche-Tard Posts Double-Digit U.S. Same-Store Growth in Other Nicotine Products, Led by Pouches
Alimentation Couche-Tard said U.S. same-store sales in its “other nicotine products” category grew at a double-digit rate in the first quarter of fiscal 2027, led by nicotine pouches, while overall U.S. same-store merchandise revenues increased 1.7%. The company also said its Canadian nicotine business continued to face regulatory pressure and illicit-market headwinds. The U.S. performance coincides with Couche-Tard's participation in efforts to reopen Canadian convenience-store access to authorized nicotine pouches, though the company has not established a direct causal link between the two.
Sep.14
AIR Global Starts Debt Refinancing Four Months After Nasdaq Listing With About $400 Million Notes Expected
AIR Global Starts Debt Refinancing Four Months After Nasdaq Listing With About $400 Million Notes Expected
AIR Limited, a wholly owned subsidiary of AIR Global, has launched an offering of U.S. dollar-denominated senior unsecured notes, with proceeds primarily intended to repay its existing term loan and revolving credit facility. AIR has not disclosed the final size, maturity or coupon; Refinitiv, citing Moody's, reported an expected issuance of approximately $400 million and a Ba3 rating. AIR had about $412.4 million outstanding under the two bank facilities at June 30 and net debt of $344.8 million. In the first half of 2026, AIR's Al Fakher-led flavored shisha molasses business generated about 99% of company revenue, while New Growth Categories including Crown Switch produced $2.2 million in revenue and remained loss-making on an adjusted EBITDA basis.
Sep.23