EU
The European Commission has decided, due to limited data, not to propose a harmonized approach for excise taxation of e-cigarettes and other novel tobacco products until further information about these products is available.
The Commission would re-examine the situation in the next regular report on tobacco taxation due in 2019.
The EU Council has asked in March 2016 for a proposal on the revision of the Tobacco Excise Directive in light of the tobacco market’s shift away from traditional tobacco, driven by the rise of new products such as e-cigarettes and heat-not-burn products, as well as the new developments in the illicit tobacco trade. This legislation sets out harmonized rules on the rates of excise duty applied to manufactured tobacco on an EU level.
Currently, e-cigarettes and other novel tobacco products are not covered by the directive and the member states asked the Commission to conduct a study to explore the possibility of imposing excise taxes. According to the Commission, due to lack of sufficient information, no excise tax should be imposed on either e-cigarettes or novel tobacco products.
The Commission stressed the information available on e-cigarettes was limited and, therefore, it was difficult to make projections for the future evolution of the market. “From a health perspective, a cautious approach should be adopted towards a potential harmonized taxation of e-cigarettes,” the Commission’s report emphasized. It also underlined that by 2016, these products had entered only a few member states’ markets.“
Given the novelty and evolutionary nature of the market, it would be extremely difficult at this stage to develop a harmonized explicit definition which captures these products both as they appear now and their future developments,” the Commission noted, adding that a possible treatment of these products would be to tax them at the same rate as smoking tobacco under the directive.