Cigarette smokers in the European Union pay far more in excise taxes than they do for the cigarettes themselves. The EU Tobacco TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Directive requires all Member States to levy a minimum excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. on cigarettes and other tobacco products. EU countries levy a specific ad quantum cigarette tax (a fixed amount per cigarette) and an ad valorem excise tax (an additional percentage of the retail sales price).
The current minimum cigarette excise rates in the EU are €1.80 ($2.12) per 20-cigarette pack, and the minimum total excise duty is at least 60 percent of the national weighted average retail price. The minimums have remained the same since 2014, but the Tobacco Tax Directive is expected to be updated soon. Member States that levy a higher specific rate of at least €2.30 per pack do not need to meet the 60 percent requirement. The two excise taxes are levied before adding the broadly applied value-added tax (VAT).
The EU Directive only establishes minimum rates, but all countries levy higher rates.
This map illustrates the wide variance in cigarette excise taxes across EU Member States. The highest tax in the EU is levied in Ireland at €10.71 ($12.64) per pack of 20 cigarettes, followed by France at €8.09 ($9.55) and the Netherlands at €7.77 ($9.17). The lowest excise tax per pack of 20 cigarettes is levied in Bulgaria at €2.03 ($2.39), followed by Croatia at €2.63 ($3.10) and Cyprus at €2.64 ($3.12).