Filenews 24 June 2025 - by Theano Thiopoulou
The European Union is promoting additional taxes that will bring significant increases in the retail prices of cigarettes, in order to limit smoking in member states and create the "tobacco-free generation".
The Commission has set a target of reducing the smoking rate to less than 5% of the population by 2040. The European Commission and an alliance of 15 member states, led by France and the Netherlands, are pushing for a radical revision of the Tobacco Excise Tax Directive (TED).
The European Commission's proposal Council Directive on the structure and rates of excise duty applied to tobacco and tobacco related products (recast) provides for a sweeping increase in minimum tax rates on tobacco products across the European Union.
"Increasing taxes and tobacco prices has proven to be the only and most effective measure to reduce overall tobacco use, encourage current smokers to quit smoking, reduce youth use, reduce consumption among those who continue to smoke, improving the health of the population, increasing tobacco tax revenues and producing additional public health benefits. The revision of the Directive will contribute to the achievement of these objectives."
No smoker is spared from the draft Directive and, in addition to traditional cigarettes, the tax increase will be extended to users of alternative tobacco products, such as heated and e-cigarettes.
The proposal, as revealed by an internal Commission document, requires the excise duty imposed to represent at least 60% of the weighted average retail sale price and not to be less than €90 per 1,000 cigarettes.
It is also mentioned that excise duty rates imposed by Member States range from €95 to €469 per 1,000 cigarettes, meaning that some Member States apply more than five times the EU minimum rate.
On average, the rate of excise duty, which has been applied substantially since 2024 (€187), is more than double the minimum. For fine-cut tobacco, the new Directive will require excise duty to represent at least 50% of the average retail price or not less than €60 per kg.
The actual rates of excise duty in the Member States range from €61 to €437 per kg.
The directive requires that the excise duty levied on cigars and cigars represent at least 5% of the retail selling price or not be less than €12 per 1,000 pieces. The average excise duty levied by Member States in 2024 was €727 per 1,000 pieces for cigars and €137 per 1,000 pieces for cigars.
Illegal cigarettes
In addition to the increase in taxes on legal tobacco, planned by the European Commission, there is also the consumption of illicit cigarettes, which increased in 2024, while at the same time the EU is at its highest level since 2015, according to the results of KPMG's annual independent report, conducted on behalf of Philip Morris International.
Specifically, according to the findings of the report, in Cyprus in 2024:
The percentage of illegal cigarettes is estimated at 14.3% of total cigarette consumption, increased by 3.29 percentage points compared to 2023 (11.0%). In total, 130 million illegal cigarettes were consumed and lost revenues for the public coffers are estimated at €22 million for 2024.
At the level of the European Union, 38.9 billion illegal cigarettes were consumed and the loss of revenues for the public coffers are estimated at €14.9 billion. (+€3.3 billion compared to 2023).
