The European Commission’s two proposed tax hikes have already stirred debate among EU countries. Photo credit: Sébastien Bertrand, CC2.0.
Consuming nicotine products might soon become significantly more expensive across the European Union (EU). On 16 July 2025, the European Commission unveiled two major proposals—the long-awaited revision of the EU Tobacco Taxation Directive (TTD) and a new measure called the Tobacco Excise Duty Own Resource (TEDOR).
The proposed modernized TTD, aimed at raising minimum excise duty rates to curb tobacco use, would be the first update since 2010. It would broaden the scope of the directive to include e-liquids, chewing and nasal tobacco, nicotine pouches, other nicotine products, and raw tobacco. According to the Commission, an increase of minimum EU tax rates is “urgently needed” to align with Europe’s Beating Cancer Plan’s goals to reduce the bloc’s current smoking rate of 24% to below 5% by 2040.
The absence of an update to the 2010 TTD and the changing market dynamics following the introduction of reduced-risk products have led to a fragmented landscape across EU countries. Under EU law, member states must impose a minimum rate on cigarette excise duties, though they are allowed to exceed that rate based on national priorities. These rates, however, presently vary widely among member states, encouraging cross-border shopping.
With a unified approach and updated minimum taxes, the Commission expects to enhance control of the tobacco supply chain, curb illicit tobacco manufacturing and trade, and generate additional EU-wide tax revenue of €15 billion (US$17.62 billion) per year. With the new revised rules, the Commission wants to set excise duty on cigarettes at no less than 7.5% and no more than 76.5% of the total tax burden. In practice, the EU minimum rate would be adjusted according to the economic situation in each individual member state, based on general price levels, the Commission said.
The proposal also seeks to harmonize tax rates and introduce minimum rates for novel nicotine products across the EU. While these products—accounting for 13% of the EU’s total tobacco market—are already taxed by most member states, but not all, they are taxed in different ways and at different rates. The increased tax, the Commission claims, also citing the attractiveness of new nicotine products to young users, will help “reduce their attractiveness as tobacco substitutes.”
The revised TTD shall apply from 2028, with a four-year transitional period to ease the introduction of the new excise duty rates for certain products, the Commission said.
The Commission’s second proposal, TEDOR, foresees the application of a uniform 15% levy on tobacco products released for consumption—on top of existing national taxes. The measure is expected to generate €11.2 billion annually. The additional revenue is meant to fund repayment of the bloc’s €650 billion Covid loans from 2028 but also become a key funding source for the Commission’s ambitious €1.816 trillion budget for the 2028–2034 period. The proposed budget, meant to boost competitiveness, climate action, and defense, is equivalent to 1.26% of the EU’s gross national income—up from around 1.1% in the current cycle.
According to the German Association of the Tobacco Industry and Novel Products (BVTE), the proposals would lift the price of a pack of 20 cigarettes in Germany from presently around €8.50 to more than €12. Thirty grams of fine-cut tobacco would cost more than €18, instead of the current €10.
The proposals have already stirred debate among EU countries. Swedish finance ninister Elisabeth Svantesson called the TEDOR proposal “completely unacceptable,” arguing that tobacco tax revenues should benefit Sweden, not the EU bureaucracy. Although snus remains exempt, other tobacco products would still be affected, which Sweden sees as a threat to its harm-reduction model.
Italy and Greece have expressed concerns about the regressive impact on low-income smokers and the potential for increased illicit trade. In general, the debate touches on deeper issues of national sovereignty, public health, and EU fiscal authority.
While TEDOR might have minimal impact on pricing in countries such as France, Finland, or Ireland, which already have high excise rates, it could lead to steep price hikes in lower-income member states, especially for budget brands and niche products like cigarillos. Countries like Bulgaria, Romania, and Greece could see significant price jumps, as their current rates are below the proposed EU minimum.
The price floor across the EU the revised TTD seeks to establish would make it unprofitable to sell tobacco below a certain threshold, which could eliminate ultra-cheap products and reduce price-based competition, especially in border regions. Critics have warned that higher prices may drive demand for untaxed or counterfeit products, especially in countries with porous borders, while small producers of niche tobacco products are concerned that disproportionate tax hikes could push them out of the market.
Tax matters require unanimous approval in the European Council—opposition from even a few member states could stall or reshape the proposal.