Italy Adjusts E-Cigarette Tax for Fourth Time in Four Years

According to reports from foreign media on March 23rd, Italy is adjusting its electronic mobility tax for the fourth time in four years, which will benefit consumers of electronic cigarettes. The new rate will take effect on April 1st, following its final approval by the Senate in late February.

The country has reduced its electronic liquid tax to the level set in 2021 by abolishing the scheduled increase set to take effect in January 2022. The tax on electronic liquids containing nicotine will be lowered from €0.175 (equivalent to $0.19) per milliliter to €0.13, while the tax on nicotine-free electronic liquids will be lowered from €0.13 per milliliter to €0.08.

The tax rate on electronic cigarettes in Italy has been subject to uncertainty, with the parliament seemingly changing them at random in almost every new annual budget. Political leaders appear to have no sympathy for small businesses attempting to plan for the future, or for consumers who simply want attractive products to help them avoid smoking.

According to current tax rates, a 10ml bottle of e-liquid (the maximum size allowed by law in all EU countries) has a starting price of 5.00 euros, resulting in an e-cigarette that costs over 8.00 euros in total.

Since 2014, Italian users of electronic cigarettes have been riding a rollercoaster of prices. At that time, the parliament imposed a tax that wiped out 75% of the country's booming legal e-cigarette industry, making e-cigarettes as expensive as smoking.

In 2014, the introduction of the highest tax in the European Union at 0.40 euros/milliliter almost doubled the price of e-liquids and forced many e-cigarette users to seek products on the black market or from illegal cross-border sellers. Some users have since returned to traditional cigarettes.

The Parliament has also banned online sales within Italy. In less than three years, the once strong Italian e-cigarette industry has shrunk from 4,000 companies (in a country with a population of 61 million!) to only 1,000.

In 2019, pressure from e-cigarette users and surviving players within the e-cigarette industry convinced lawmakers to correct their mistake and lower taxes by 80%. For e-liquids containing nicotine, the tax is now 0.08 euros per milliliter, and for nicotine-free e-liquids, the tax is also 0.08 euros per milliliter.

Last year, politicians once again raised taxes and set automatic increases for 2022 and 2023, ultimately raising the tax rate on e-liquids containing nicotine to about 0.21 euros/mL and the tax rate on nicotine-free e-cigarette juice to 0.17 euros/mL. (Due to COVID, the parliament later temporarily lowered the rates to 2019 levels, but the relief expired at the end of 2021.)

In addition to the electronic liquid tax, consumers also pay a 22% sales tax - known as value-added tax (VAT) - on all electronic cigarette products (as well as most other products). At current tax rates, a 10ml bottle of e-liquid (the maximum size allowed by law in all EU countries) starts at €5.00, making an e-cigarette that costs over €8.00 in total. Nearly 40% of the consumer cost is attributed to taxes.

Source: Vaping360