Heated Tobacco E-liquid Nicotine Pouches Harmonised Tax Rate

The revised Tobacco Tax Directive (TTD) proposed by the European Commission is planned to be implemented from 2028, including raising the minimum consumption tax on tobacco, setting a unified tax rate for heated tobacco, e-liquid(for vape) and nicotine pouches for the first time, and including raw cigarettes in the consumption tax regulatory system. At the same time, a “TEDOR” mechanism is proposed to uniformly collect 15% tobacco tax revenue, which is expected to increase the EU budget by about 11 billion euros annually. But the plan has sparked opposition from member states, with Sweden criticizing it as “unacceptable” for the domestic nicotine pouches market, and Portugal opposing the transfer of national taxes to the European Union.

Key details:

1. The revision is planned to take effect from 2028, with a maximum transition period of four years.
2. The first unified tax burden for heated tobacco, vape’s e-liquid, and nicotine pouches; Raw tobacco leaves are included in EMCS tracking.
3. TEDOR plans to become an EU owned resource with a 15% tax rate, with an annual revenue of approximately 11 billion euros (approximately 12.92 billion US dollars).
4. France and the Netherlands have a high proportion of illegal consumption, while Greece and Italy show signs of improvement.
5. Sweden and Portugal openly oppose it; Southern European growers warn of job damage.
6. The revised proposal requires unanimous agreement from the board of directors, and the negotiation difficulty is high.

Dank Smoke September 28, 2025 – According to Eureporter, the latest revision of the Tobacco Tax Directive (TTD) by the European Commission is facing strong opposition from multiple parties. Member states and industry groups claim that the new plan may “severely damage” rural economies, drive up illegal trade, and open up space for China to expand its control in the European tobacco supply chain.
According to the proposal released by the committee in July 2025, the revised directive will apply from 2028 and establish a transition period of up to four years. The plan aims to increase the unified minimum consumption tax level in the European Union and for the first time set coordinated tax rates for heated cigarettes, e-liquid(for vape), and nicotine pouches.
A new measure in this revision is to include raw tobacco in the EU system. Although the minimum consumption tax for raw tobacco leaves is set at 0 euros per kilogram (to avoid double taxation), this adjustment will include the circulation of raw tobacco leaves in the “Consumption Tax Circulation and Control System” (EMCS), allowing customs to track and supervise the supply during the initial processing stage.
At the same time, the proposed TEDOR (Tobacco Excise Duty Own Resource) mechanism will levy a uniform 15% tobacco consumption tax base on member states, as a new EU owned resource, expected to bring approximately 11 billion euros (12.92 billion US dollars) in revenue to the EU budget annually.
In terms of impact assessment, the committee believes that tax system coordination will reduce cross-border tax arbitrage and strengthen regulation. However, industry research warns that sudden price shocks may stimulate illegal trade. Recent data reflects this challenge: illegal consumption in France accounted for approximately 38% in 2024, equivalent to 18.7 billion units; The proportion of untaxed cigarettes in the Netherlands has almost doubled in two years, rising from 15% in 2021 to 25% in 2023. On the other hand, Greece’s illegal share decreased by over 6 percentage points to 17.5% in 2024, the largest decline in a decade; Italy also reported moderate improvement. Analysts attribute it to the combination of law enforcement measures and cross-border collaboration.
Political resistance has already formed. Sweden, which has an exemption from the membership clause for snus, strongly opposes the proposal. Finance Minister Elisabeth Svantesson called the proposal “completely unacceptable” and particularly opposed the arrangement for nicotine pouches, which are in high demand domestically. The Portuguese government has also issued a statement expressing “strong concern” over provisions including the transfer of 15% tobacco consumption tax revenue to the EU budget under TEDOR.

Southern European growers and producers are concerned about economic damage. The European Commission estimates that there are currently around 26000 professional growers still employed in 12 member states; Earlier studies estimated the employment on related farms to be around 80000 across Europe. Italy, Spain, Greece, and Poland remain the main producing countries. By comparison, China produces over 2 million tons of tobacco annually, far exceeding the EU’s 140000 tons. European farmers believe that stricter regulations and higher tax burdens will further weaken competitiveness and weaken support for the Common Agricultural Policy (CAP). Italian parliamentarian Riccardo Augusto Marchetti warned that “tens of thousands of livelihoods are at risk” and called on the government to speak up for growers and small businesses.

The European Commission defended the measure, stating that updating the Tobacco Tax Directive can adapt to public health challenges and significant market changes, modernizing single market rules. The spokesperson stated that the revised directive is planned to apply from 2028 and set a four-year transition period for some products for member states to adjust.
In terms of follow-up, due to the need for unanimous approval from the board of directors for tax legislation, the reform faces a difficult political path. The committee hopes to reach an agreement before its application in 2028, but strong opposition from some member states may lead to delays or dilution. The current debate is seeking a balance between public health goals and the risks of economic harm and illegal trade, a dilemma that has plagued EU tobacco policy for decades.

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