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The arrangements for the taxation of tobacco products were introduced on 1 January 1993 . They are the outcome of discussions which started in 1985 with the White Paper on completing the internal market, in which the Commission proposed full harmonisation of excise duties on manufactured tobacco. However, the Council chose not to take this approach and did not consider a harmonisation of the excise duty rates throughout the European Union necessary for the proper functioning of the Internal Market.

The current Community framework for the taxation of tobacco products provides for

  • a common structure (product definitions and means of taxation) for excise duty on tobacco products as well as
  • minimum rate levels, above which Member States are free to set their national rates at levels they consider appropriate according to their own national circumstances.

In addition, the Community legislation provides at present for a review of the structure and rates of excise duties on tobacco every four years. The Commission is obliged to make regular reports on tobacco taxation and these reports have to be submitted to the Council.

The 2006 report has taken into account all relevant factors. Although excise duty is primarily an instrument for generating revenue at national level, policy-making in this area had to take the wider objectives of the Treaty into account. Given the characteristics of manufactured tobacco products, the report has paid particular attention to health considerations, taking stock of the Framework Convention on Tobacco Control, recently agreed within the World Health Organisation.

The control, holding and movement by businesses of duty-suspended manufactured tobacco are subject to common provisions laid down in Council Directives 92/12/EEC and 2008/118/EC. In accordance with the principles of the single market, private individuals enjoy greater freedom to purchase duty-paid goods for their own use in the Member State of their choice and to transport them to another Member State without having to pay duty again.

More information is available on the page "travellers".