Niche products and EU SMEs hit the most by Commission’s proposal

On 16 July 2025, the European Commission unveiled a proposal to revise the Tobacco Excise Directive. While the proposal is meant to tackle the developments and emergence of new products (e-cigarettes, heated tobacco products and new products containing nicotine), the European Commission also decided to revise the EU minimum rates applicable to traditional tobacco products. It disregards the different tax-bearing capacity of niche products from mass-produced tobacco and nicotine products demonstrating a misunderstanding of the market.

Current EU minimum

2025 proposed rates

Increase

Cigarettes

90e / 1000 units

215e / 1000 units

139 %

Roll-your-own tobacco

60e / kg

215e / kg

258 %

Cigars/cigarillos

12e / 1000 units or kg

143e / 1000 units or kg

1092 %

OR

OR

5% ad valorem

40% ad valorem

700 %

Other smoking tobacco

22e / kg

143e / kg

550 %

Waterpipe tobacco

22e / kg

107e / kg

386 %

Nicotine pouches

N/A

143e / kg

–

Heated tobacco

N/A

108 e / 1000 units OR 155e / kg

–

E-liquids with more than 15mg of nicotine / ml

N/A

0.36e / ml of liquid

–

E-liquids with up to 15mg of nicotine / ml

N/A

0.12e / ml of liquid

–

Paul Varakas, Director General of the European Cigar Manufacturers Association:

“Increasing the EU minimum rate by 1100% for niche products which are already the least affordable on the tobacco and nicotine market, is out of touch and completely irresponsible.

Cigars/cigarillos have always benefited from a differentiated tax rate due to their substantial manufacturing costs and differences. The emergence of new products on the market should not change this fact. Cigars/cigarillos should not be lumped in with new nicotine products. They have different consumption patterns and different groups of consumers.

This proposal is very worrying. It goes against every commitment the EU Executive has made recently regarding reducing the regulatory burdens for SMEs and midcaps, companies that are largely dominating the cigar/cigarillo segment, as opposed to other products manufactured by Big Tobacco.

Some of the proposed measures for the cigar sector have been rejected in numerous supporting studies. In the midst of the EU budget season, it makes you wonder why the EU Commission is spending millions on consulting fees to disregard their expertise.

We urge Member States to reconsider some of the proposed measures so as to not severely hit EU SME and midcaps competitiveness and sustainability.”.