Brussels, Belgium. Cyprus’s EU Council Presidency discussed a new compromise text on reforming the Tobacco Excise Tax Directive on January 21, but talks underscored ongoing divisions among member states. The exchange took place in the Council’s Working Group on Tax Questions.
Compromise text and member-state positions
The Cyprus Presidency’s latest attempt to advance the long-stalled revision of the Tobacco Excise Tax Directive aimed to inject momentum into the process, but highlighted how far member states remain from a shared position.
The compromise draft proposed a lower minimum excise rate alongside extended transitional periods. The text stems from a European Commission proposal presented in July 2025 to update the tax framework to reflect current tobacco and nicotine markets, including e-cigarettes, heated tobacco and nicotine pouches, and to lift minimum duties on conventional tobacco to reduce intra-EU disparities.
The Commission’s proposal has split member states into opposing camps. France, Spain, Germany, Ireland and the Netherlands have argued for stronger, more uniform taxation to reduce consumption and support EU health goals, while Italy, Romania, Greece and Hungary have emphasized economic exposure and enforcement risks.
Public health arguments and research cited
Public health-focused capitals have argued that weakening minimum rates or extending transition periods would reduce the directive’s impact, and that tax harmonisation is needed to curb price gaps, limit crossborder purchasing, and reduce consumption across the single market.
At a European Respiratory Society event in late January, Professor Hana Ross of the Vienna Institute for International Economic Studies presented research stating that there is no link between cigarette excise tax levels and illicit trade in the EU.
Tobacco industry interference concerns and consultation allegations
The European Commission publicly raised concerns in late January about tobacco industry interference, with officials saying the EU executive had “probably” faced a coordinated effort to manipulate results of its public consultation on the reform.
According to the account, in the final hours of the feedback period, thousands of anonymous, near-identical submissions appeared echoing industry talking points, alongside fabricated responses falsely attributed to public health experts expressing opposition to the proposed overhaul.
Broader context: delays, parallel trade, and traceability
The article describes the interference claims as part of a pattern that has delayed revision of the Tobacco Excise Tax Directive and the Tobacco Products Directive, and as affecting alignment with the World Health Organization Framework Convention on Tobacco Control.
It also states that tobacco companies flood low-tax markets such as Luxembourg, enabling cheap products to move into higher-tax countries including France and the Netherlands, and that this parallel trade is used to argue against EU-wide tax increases.
The article further says that the industry influenced the EU traceability system launched in 2019, including through pre-implementation lobbying that shaped the Commission’s choice of private operators.
What do you think EU member states should prioritise when negotiating the Tobacco Excise Tax Directive reform?