EU legislation on excise duties for manufactured tobacco defines:
Manufactured tobacco is also subject to the common provisions for excisable goods under EU law.
Directive 2011/64/EU requires Member States to levy a minimum rate of excise duties on cigarettes.
This minimum rate must consist of:
In addition, the overall excise rate must be:
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.
Specific provisions exist to allow Portugal 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.
Directive 2011/64/EU also sets down minimum excise duty rates for manufactured tobacco other than cigarettes.
The structure for taxing "other tobacco products" is slightly different than for cigarettes.
Member States can choose between applying a specific component or an ad valorem component, or if they wish, they may apply a mixture of the two.
Minimum rates are set out for three distinct categories of "other tobacco products"
|Product Category||Minimum Rate|
|Fine-cut smoking tobacco||48% of the weighted average retail selling price*|
EUR 60 per kilogram*
|Cigars and Cigarillos||5% of the retail selling price|
EUR 12 per 1000 or per kilogram
|Other smoking tobaccos||20% of the retail selling price|
EUR 22 per kilogram
* To gradually increase, by 2020, to 50% or EUR 60