German Bundestag Passes Tobacco Tax Hikes: Vape Liquid Duty to Reach €0.44/ml, Heated Tobacco Taxes to Rise and Cigarettes Seen Near €12 a Pack

Regulations
Oct.19
German Bundestag Passes Tobacco Tax Hikes: Vape Liquid Duty to Reach €0.44/ml, Heated Tobacco Taxes to Rise and Cigarettes Seen Near €12 a Pack
Germany's Bundestag passed amendments to the Tobacco Tax Act on October 15, 2026, setting out annual excise tax increases from 2027 through 2030 for e-cigarette liquids, heated tobacco, cigarettes and other tobacco products. Under the Finance Committee's amended bill, duty on qualifying e-liquids will rise from €0.32/ml in 2026 to €0.44/ml in 2030, an increase of 37.5%. Heated tobacco will retain its tax calculation based on 80% of the corresponding cigarette excise duty. The average price of a 20-cigarette pack is projected to approach €12 by 2030, with some brands potentially reaching €14. The legislation is projected to generate approximately €11.8 billion in additional tax revenue over four years and remains subject to further legislative procedures.

Key Points

  • Germany's Bundestag approved tobacco tax amendments on October 15, 2026, providing for annual increases from 2027 through 2030 across vaping, heated tobacco and conventional tobacco products.
  • Excise duty on qualifying e-liquids and tobacco substitutes will rise from €0.32/ml in 2026 to €0.38/ml in 2027 and €0.44/ml in 2030, a cumulative increase of 37.5%.
  • Heated tobacco will retain its tax calculation based on 80% of the corresponding cigarette excise duty, with its tax burden increasing as cigarette duties rise.
  • Average retail prices for a pack of 20 cigarettes are projected to approach €12 by 2030, with some brands potentially reaching €14.
  • The revised bill is projected to generate €11.824 billion in additional tax revenue from 2027 to 2030, while tobacco industry representatives warn of potential growth in illicit trade.

2Firsts

October 16, 2026

Germany's Bundestag passed amendments to the Tobacco Tax Act on October 15, setting out annual excise tax increases from 2027 through 2030 covering e-cigarette liquids, heated tobacco, cigarettes and other tobacco products. Under the Finance Committee's amended bill, duty on qualifying e-liquids will rise from €0.32 per milliliter in 2026 to €0.44 in 2030, an increase of 37.5%. Heated tobacco will retain a tax calculation based on 80% of the corresponding cigarette excise duty, while the average retail price of a 20-cigarette pack is projected to approach €12 by 2030. The revised measure is expected to generate approximately €11.8 billion in additional tax revenue over four years.

The amendments were approved in the version submitted by the Bundestag's Finance Committee on October 14 under document 21/8605.

The governing Christian Democratic Union/Christian Social Union (CDU/CSU) and Social Democratic Party (SPD) supported the bill. Alternative for Germany (AfD), the Greens and the Left voted against it, along with two lawmakers from the CDU/CSU parliamentary group.

The Finance Committee raised several proposed tax rates compared with the government's original bill and revised implementation dates and tax stamp arrangements for certain product categories.

E-Liquid Duty to Reach €0.44/ml by 2030, Up 37.5% From 2026

The reform increases Germany's existing excise duty on products classified as tobacco substitutes (Substitute für Tabakwaren), including substances intended for use in electronic cigarettes.

Germany already levies a volume-based excise tax on e-liquids. The applicable rate in 2026 is €0.32 per milliliter.

Under the Bundestag-approved version, the rate will increase annually from 2027 through 2030.

YearOriginal Government ProposalBundestag-Approved VersionChange From 2026
2026€0.32/ml€0.32/ml—
2027€0.33/ml€0.38/ml+18.75%
2028€0.34/ml€0.40/ml+25.00%
2029€0.35/ml€0.42/ml+31.25%
2030€0.36/ml€0.44/ml+37.50%

The Finance Committee raised the proposed 2027 rate from €0.33 to €0.38 per milliliter and the 2030 rate from €0.36 to €0.44 per milliliter.

For a 10 ml bottle of e-liquid subject to the duty, the excise tax would increase from €3.20 in 2026 to €3.80 in 2027 and €4.40 in 2030.

That represents an additional €1.20 in excise duty per 10 ml by 2030, excluding VAT and other retail costs.

In its amended bill, the Finance Committee assumed that the additional excise tax costs would be passed on to consumers through higher product prices.

The tobacco-substitute classification is defined under German tax law and covers qualifying substances used in e-cigarettes. The per-milliliter rate does not automatically apply to all alternative nicotine products, including nicotine pouches.

Heated Tobacco Retains Tax Formula Based on 80% of Cigarette Duty

Heated tobacco products (HTPs) are also covered by the scheduled tax increases.

Under Germany's Tobacco Tax Act, heated tobacco is taxed through a combination of pipe tobacco duty and an additional excise component.

The additional component is calculated as 80% of the corresponding cigarette excise duty minus the pipe tobacco duty. The total tax liability is determined under the statutory formula.

For the calculation, each individually portioned heated tobacco stick is treated as equivalent to one cigarette.

The Finance Committee retained this mechanism in its amended bill.

As cigarette excise duties rise from 2027 through 2030, the corresponding tax liability on heated tobacco will also increase.

Under the government's original proposal, the Federal Ministry of Finance estimated that the average excise tax on heated tobacco would rise from 16.65 euro cents per stick in 2026 to 23.12 euro cents by 2030.

The Finance Committee subsequently raised cigarette tax rates. The 23.12-cent estimate therefore reflects the original government proposal rather than a recalculated amount under the Bundestag-approved amendments.

Cigarette Pack Prices Seen Near €12 by 2030, With Some Brands Potentially Reaching €14

The amendments also provide for annual increases in conventional cigarette excise duties from 2027 through 2030.

Germany's cigarette excise tax combines a fixed duty per cigarette, a percentage of the retail price and minimum duty requirements.

The Finance Committee raised the ad valorem component to 21.05% and increased the fixed duty for each year.

YearFixed Excise Duty per CigaretteAd Valorem Rate
202714.34 euro cents21.05%
202815.63 euro cents21.05%
202917.04 euro cents21.05%
203018.57 euro cents21.05%

The figures are taken from the Bundestag-approved amendments. Actual excise liability is also subject to statutory minimum duty requirements.

According to German public broadcaster Tagesschau, the weighted average retail price of a pack of 20 cigarettes is projected to increase from approximately €8 currently to almost €12 by 2030.

Some cigarette brands could reach €14 per pack.

These are price forecasts based on the proposed tax changes and expected retail market developments, rather than legally mandated selling prices.

The Finance Committee's fiscal estimates assume that the higher excise duty costs will be fully passed on to consumers.

Fine-cut tobacco, used for hand-rolled cigarettes, is also scheduled for annual tax increases during the four-year period.

Other Tobacco Products Face Higher Duties as Tax Stamp Transition Rules Change

The legislation also covers cigars, cigarillos, pipe tobacco and waterpipe tobacco.

The Finance Committee's amended bill establishes the following implementation schedule for the main product categories:

Product CategoryFirst Scheduled AdjustmentMain Change
CigarettesJanuary 1, 2027Higher fixed and ad valorem excise duties
Fine-cut tobaccoJanuary 1, 2027Revised weight-based, price-based and minimum duties
Heated tobaccoJanuary 1, 2027Higher duty linked to cigarette taxation, retaining the 80% benchmark
E-liquids and tobacco substitutesJanuary 1, 2027Increase from €0.32/ml to €0.38/ml
Cigars and cigarillosMarch 1, 2027Certain revised rates and transitional provisions take effect
Pipe tobaccoMarch 1, 2027Certain revised rates and transitional provisions take effect
Waterpipe tobaccoMarch 1, 2027Certain revised rates and transitional provisions take effect

The Finance Committee also revised the arrangements for tax stamps required under the new rates.

Under the amendments, new tax stamps for cigarettes, fine-cut tobacco, heated tobacco and tobacco substitutes may be obtained five weeks before the revised rates take effect, subject to the relevant requirements.

This transitional provision applies to the late-2026 switch to the new tax rates. The same accelerated arrangement is not required for cigars, cigarillos, pipe tobacco and waterpipe tobacco, whose revised rates begin in March 2027.

Germany Projects €11.8 Billion in Additional Revenue as Industry Warns of Illicit Trade

The German government has presented the tobacco tax increases as part of its federal budget consolidation efforts, while also citing public health objectives.

According to Finance Committee document 21/8605, the amended rates are projected to generate the following additional federal tax revenue:

Fiscal YearEstimated Additional Tax Revenue
2027€1.507 billion
2028€2.437 billion
2029€3.419 billion
2030€4.461 billion
2027–2030 total€11.824 billion

Figures represent projected incremental federal tax revenue by fiscal year, not Germany's total annual tobacco excise receipts.

Finance Minister Lars Klingbeil told German public broadcaster ARD that the increases were intended to support budget consolidation and strengthen public health protection.

He referred to a federal budget shortfall of approximately €34 billion and identified the health of children and young people as a priority.

Tobacco industry representatives have questioned the government's revenue forecasts.

Industry groups warned that higher taxes on legal tobacco products could encourage consumers to turn to smuggled, illicit or untaxed products purchased abroad, potentially reducing sales through authorized retailers.

The governing coalition also acknowledged concerns about illicit trade, cross-border purchasing and untaxed imports. Lawmakers called for stronger customs enforcement and greater harmonization of tobacco taxation across the European Union.

Public health organizations, including the German Cancer Research Center (DKFZ), supported higher tobacco taxes, arguing that increased prices could help reduce smoking and discourage young people from starting.

Germany's 2025 microcensus found that approximately 19% of people aged 15 and older smoked. Tagesschau also cited DKFZ data estimating that about 131,000 people died from tobacco-related diseases in Germany in 2023.

Bundestag Approves Amendments, With Further Legislative Procedures Pending

Germany's Bundestag approved the amended Tobacco Tax Act on October 15, 2026, adopting the version submitted by the Finance Committee under document 21/8605.

The Bundesrat, Germany's upper chamber representing the federal states, had not objected to the government's original proposal.

As of October 16, however, the official records reviewed had not confirmed the completion of the Bundesrat's subsequent procedures concerning the final Bundestag-approved version.

The main tax increases for e-liquids, heated tobacco, cigarettes and fine-cut tobacco are scheduled to begin on January 1, 2027, subject to completion of the legislative process.

Certain revised rates for other tobacco products are scheduled to take effect on March 1, 2027.

Follow 2Firsts for timely updates on global tobacco and nicotine regulations, tax policy and market developments.

Cover Image Source: Deutscher Bundestag


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