European Anti-Fraud Office

Tobacco smuggling

Tobacco smuggling

Tobacco smuggling causes heavy yearly losses to the budgets of Member States and the EU in evaded customs duties and taxes. Smuggled tobacco respects no rules and poses great risks to consumers and businesses. It undermines anti-smoking and public health campaigns and violates the strict rules that the EU and Member States have on manufacturing, distribution and sale.

It is difficult to estimate the illicit tobacco market with precision. This is because - as with other illicit practices - tobacco contraband and counterfeiting are clandestine activities in constant fluctuation and change. Fraudsters go to great lengths at concealing and changing patterns to escape controls.

What is OLAF's role?

OLAF investigates cases of customs fraud as they are financially damaging to the EU taxpayers. OLAF has an explicit mandate to fight cigarette smuggling as part of the EU efforts to curb this phenomenon. OLAF works in close cooperation with national law enforcement agencies and customs services both inside and outside the EU to prevent, detect and, investigate tobacco smuggling – so that evaded duties can be recovered and perpetrators prosecuted.

Frequently asked questions on our activity in this field

Agreements with tobacco manufacturers

To address the problem of contraband and counterfeit cigarettes, the European Union and all 28 Member States (except Sweden for the BAT and ITL agreements) have signed legally binding and enforceable agreements with the world's four largest tobacco manufacturers, by virtue of which the manufacturers agreed to:

  • pay a collective total of $2.15 billion to the EU and countries participating in the agreement
  • prevent their products from falling into the hands of criminals by notably: 
    • supplying only those quantities required by the legitimate market
    • taking care that they sell to legitimate clients only
    • implementing a tracking system to help law enforcement authorities if cigarettes are traded illegally.

Philip Morris International (2004) - Agreement expired in July 2016

Japan Tobacco (2007)

British American Tobacco (BAT) (2010)

Imperial Tobacco Limited (ITL) (2010)

OLAF has also represented the EU in negotiations on the World Health Organization Protocol to eliminate the illicit trade in tobacco products (FCTC Protocol). For further details click here.

Related documents

Annual Task Group Cigarettes Conference (Riga, 29/30.06. 2016)

European Commission replies to European Parliament questionnaire on the topic of the fight against illicit tobacco trade (16.06.2015)

Speaking points of Commissioner Šemeta on Tobacco Agreements (CONT Committee 7.10.2014). 

Other counterfeit goods

Pursuant to a reorganisation in 2012, OLAF's activities have been extended to cover investigations on fraud related to Intellectual Property Rights. OLAF has long been investigating the illegal trade in counterfeit cigarettes and tobacco products but its scope will from now also include other counterfeit goods that enter the EU through its external borders.