Taxation and customs union

Excise Duties: Cigarettes

Directive 2011/64/EU requires Member States to levy a minimum rate of excise duties on cigarettes.

This minimum rate must consist of:

  • A specific component of between 7.5% and 76.5% of the total tax burden (TTB) - expressed as a fixed amount per 1000 cigarettes
  • An ad valorem component - expressed as a percentage of the maximum retail selling price

In addition, the overall excise rate must be:

  • At least EUR 90 per 1000 cigarettes
  • At least 60% of the weighted average retail selling price

Member States that apply excise duty of EUR 115 or more, however, do not need to comply with the 60% criterion above.

 

How it works: Sample Calculation for pack of 20 cigarettes

Retail Selling Price (excluding taxes) EUR 0.7
+ Excise duty - specific: EUR 1.0
+ Excise duty - ad valorem: EUR 0.8 (27% of RSP)
Total excise duty: EUR 1.8 (60% of RSP)
= Price (excluding VAT) EUR 2.5
+ VAT 20% EUR 0.5
= Retail Selling Price (including all taxes) EUR 3.0

EU legislation only sets harmonised minimum rates. Member States are free to apply excise duty rates above these minima, according to their own national needs.

 

Transitional periods and special arrangements

Directive 2011/64/EU also has specific provisions to allow certain transitional periods and reduced rates for certain Member States. These are:

  • Bulgaria, Estonia, Greece, Latvia, Lithuania, Hungary, Poland and Romania have a transitional period until 31 December 2017 to reach the overall minimum excise duty on cigarettes;
  • Portugal is allowed to apply a reduced rate up to 50% less than the required overall minimum excise duty on cigarettes consumed in the most remote regions of the Azores and Madeira.
  • France may continue to apply a reduced rate of excise duty on cigarettes and on manufactured tobacco other than cigarettes released for consumption in Corsica until 31 December 2015.
For private individuals, who buy cigarettes for their own use, the tax is paid in the Member State of origin i.e. where they buy the cigarettes. This is the case even if they bring these goods into another Member State. For more information, see "travelling"