Illicit cigarette consumption cost the EU an estimated US$14.9 billion in lost tax revenue last year. Photo credit: PxHere.
Illicit cigarettes in the European Union (EU) have reached their highest level since 2015, according to the most recent KPMG study on illicit cigarette trade from June 2025, which was commissioned by Philip Morris Products SA. Next to the EU27, it also covers Albania, Bosnia and Herzegovina, Kosovo, Moldova, Montenegro, North Macedonia, Norway, Serbia, Switzerland, Ukraine, and the United Kingdom.
In 2024, EU smokers consumed 38.9 billion illicit cigarettes, an increase of 3.8 billion or 10.8% compared to 2023. The study finds that overall cigarette consumption increased by 0.2% across the bloc in 2024, leading to an estimated tax revenue loss of US$14.9 billion. Illicit cigarettes accounted for 9.2% of total consumption, with illicit whites – legally manufactured cigarettes almost entirely intended for illegal distribution in markets where they are not registered or legally sold – accounting for 21% or 8.2 billion sticks, up 15.1% versus 2023. Counterfeit products made up 15.3 billion of consumption, an increase of 20.2% compared to the previous year. With 15.5 billion, 0.9% more than in 2023, the ‘other contraband & counterfeit’ category, which primarily involves legal, duty-paid cigarettes that are moved in small quantities just beyond allowable limits, represented 40% of illegal cigarette consumption.
Two EU member states stick out: with a consumption of 18.7 billion sticks in 2024 and 37.6% of total consumption, France continued to be Europe’s largest illicit market for cigarettes. The Netherlands saw a 10.2% increase, the largest in illicit cigarettes share, which doubled to 17.9% of the country’s total consumption. Both France and the Netherlands have excessively high taxes on cigarettes – while the total tax burden on a tax of 20 cigarettes is 84.7% of the pack price, leading to an average pack price of €10.95 in France, total tax share on a pack of 20 cigarettes in the Netherlands stands at 110%, with pack prices ranging between €11.10 and €12.
When including the nine European markets outside the EU27, KPMG’s study states that total cigarette consumption continued its long-term declining trend. Illicit cigarette consumption accounted for 52.2 billion sticks in 2024, 0.2% up from 2023 and accounting for 10% of total consumption and an estimated tax revenue loss of €19.4 billion.
In the UK, with 5.9 billion units in 2024 Europe’s third-largest market for illicit cigarettes, the volume of illegal smokes decreased by nearly 0.8 billion sticks in 2024, although their total share remained stable. EU member states such as Bulgaria, Greece, Italy, and Portugal have made significant progress in combatting illicit tobacco trade – with a 6.2% decrease in illicit cigarette consumption in 2024, Greece, for instance, saw the largest reduction in a decade. Outside the EU, Ukraine recorded the largest decrease in illicit cigarette consumption, with contraband and counterfeit volumes declining by 2.4 billion or 29% in 2024, as opposed to a 1.1 billion increase in the previous year.
For the first time, KPMG’s study included the illicit consumption of heated tobacco products in the Czech Republic, Germany, Greece, Hungary, Italy, Lithuania, Poland, Romania, Spain, and the UK. Contraband consumption, the report shows, stood at 0.4 billion consumables in 2024, representing 0.9% of total consumption and an increase of 0.02 billion compared to 2023. With 7.8%, illicit consumables had the highest share of total consumption. Illicit consumable volume was particularly high in Germany (0.15 billion units) and Poland (0.08 billion units). In contrast to illicit cigarette flows, which are known quite well, no counterfeit flows for heated tobacco sticks have been identified to date.