Filenews 13 October 2025 - by Theano Thiopoulou
A significant increase in the price of tobacco products is foreshadowed by the implementation of a new European directive on the taxation of traditional and innovative tobacco products, with the aim of limiting their use. The Commission has set a target of reducing the smoking rate to less than 5% of the population by 2040.
The final decision requires unanimity, which portends tough negotiations between the member states in the coming period. The European Commission and a coalition 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 for a 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.
In the context of the Eurogroup and ECOFIN meetings, held in Luxembourg on 10 October, the European Commission presented its recent proposal to update the rules on the structure and minimum rates of excise duty applicable to tobacco and related tobacco products in the EU (the Tobacco Taxation Directive).
The proposed revision aims to broaden the scope of covered products to include novel tobacco and nicotine products, as well as to increase minimum rates of excise duty to support public health objectives and align fiscal policy with current market dynamics.
In the ensuing exchange of views, ministers presented their initial positions on the proposal. The World Health Organization has urged governments around the world to step up tobacco control. They warn that new products, such as e-cigarettes and nicotine pouches, are fuelling a new wave of nicotine addiction. The Danish Presidency takes these concerns very seriously. We believe that the promotion of this proposal is necessary to protect public health and reduce cross-border purchases of tobacco and nicotine products. Protecting the health of young people in Europe is one of our most important tasks, said Stephanie Loze, Denmark's finance minister.
The Minister of National Economy and Finance of Greece, Kyriakos Pierrakakis, stressed that "public health is a fundamental, existential priority", pointing out, however, the need to avoid sudden increases in taxation. "According to our experience in Greece, and taking into account our geographical location, it has been observed in the past that the asymmetric increase in these tax rates leads to an increase in smuggling," he said, proposing wider transitional periods for the implementation of the new measures.
The main innovations of the revised Tobacco Taxation Directive are:
• Increase the minimum tax rates to reduce inequality in the rates applied by the Member States. The Commission proposes a partial purchasing power approach to manage price increases in Member States with lower average incomes. In practice, the EU minimum rate will be adjusted according to the economic situation in each Member State, based on general price levels. This way, citizens can be confident that their country's tax rules are more effective in achieving public health goals.
• Extension of the scope of the Directive to new products (e.g. e-cigarettes, heated tobacco and nicotine pouches). These products will be covered by new minimum taxes.
• Better control measures on raw tobacco, which is subject to significant fraud. Currently, tobacco leaves can be produced and circulated without control in the EU, which has led to the illegal manufacture of counterfeit cigarettes. With the proposal, the existing electronic system for recording and monitoring the movement of excise products within the EU will also apply to raw tobacco. This will help Member States to better detect and combat illicit trade in tobacco products.
