Changes from plenary report to adopted text

RemovedRecital 6: (6) The various types of manufactured tobacco and tobacco related products, distinguished by their characteristics, by their differing health risks and by the way in which they are used, should be defined.

RemovedRecital 8: (8) A distinction needs to be made between fine-cut tobacco for the rolling of cigarettes, other smoking tobacco , waterpipe tobacco and heated tobacco to improve legal certainty and fight against fraud. The definition of manufactured tobacco and tobacco related products pursuant to this Directive should be aligned with the definitions laid down in other legislative acts of the Union.

RemovedRecital 9: (9) In the interests of uniform and fair taxation, a definition of cigarettes, cigars and cigarillos , fine-cut tobacco for the rolling of cigarettes and other smoking tobacco , waterpipe tobacco, heated tobacco and other manufactured tobacco should be laid down so that rolls of tobacco which according to their length can be considered as two cigarettes or more are treated as two cigarettes or more, smoking tobacco which is similar in many respects to fine-cut tobacco for the rolling of cigarettes is treated as fine-cut tobacco , tobacco which is sold, or intended to be sold, in a waterpipe is treated as waterpipe tobacco, tobacco which is heated or otherwise activated by chemical reaction is treated as heated tobacco, other tobacco prepared and intended for human consumption is treated as other manufactured tobacco, and tobacco refuse is clearly defined.

RemovedRecital 11 a (new): (11a) Due consideration should be given to the economic sustainability of agricultural production and of manufacturing and retail sectors linked to tobacco, particularly in regions where such activities represent a significant source of employment, while ensuring consistency with public health objectives.

RemovedRecital 12: (12) For the proper functioning of the internal market, it is necessary to establish minimum excise duties for all categories of manufactured tobacco and tobacco related products. Different and proportionate minimum excise duties should be established for each category of tobacco and tobacco related product to reflect differences in product characteristics, health risks and how the products are used. Clearly defined product categories and minimum rates of excise duties would help to reduce consumption and minimise distortion of competition in Member States by ensuring coherent tax treatment of products across the internal market.

RemovedRecital 13: (13) To avoid its obsolescence over time and to ensure its effectiveness, the minimum Union rate of excise duty for each product category should be updated every three years exclusively on the basis of changes in the Union harmonised index of consumer prices, excluding energy and unprocessed food (core inflation), as published by Eurostat. The adjustment should be based on core inflation rather than headline inflation in order to avoid potential excessive volatility caused by significant price increases of more fluctuating goods such as energy and food. Moreover, a maximum adjustment cap of 9 % should ensure better predictability for national tax authorities and the tobacco products market. The inflation adjustment mechanism should only apply after the end of the transitional period, to decrease the level of complexity for Member States.

RemovedRecital 14: (14) To ensure a balanced distribution of impacts across Member States, the economic situation of Member States needs to be considered by adjusting the minimum Union rates of excise duty by the price levels index of each Member State, as published by Eurostat. Such adjustment should be revised every three years. The price level index adjustment should be applied exclusively within the scope of this Directive and should not be referenced in relation to any future tax directives.

RemovedRecital 14 a (new): (14a) The assessment of the redistributive effects of fiscal measures should take into account both their impact on income distribution and their contribution to reducing health risks and long-term public expenditure related to healthcare.

RemovedRecital 18: (18) A certain degree of convergence would help ensure a high level of protection for human health. The level of taxation is a major factor in the price of tobacco and tobacco related products, which in turn influences consumers’ consumption habits. Fraud and smuggling undermine tax induced price levels, in particular of cigarettes and fine-cut tobacco for the rolling of cigarettes, and thus jeopardise the achievement of tobacco control and health protection objectives. It is therefore of the utmost importance to keep in mind the impact of new minimum excise duty rates on illicit trade and the growth of the black market. Delivering on public health objectives while simultaneously not incentivising consumers to search for cheaper products on the black market is a key objective. Minimum levels of taxation should be determined in an appropriate and careful manner in order to avoid a situation where, due to significant increases in minimum rates, consumers choose to obtain tobacco products from the black market, leading to potential negative consequences on tax revenue and an unchanged public health situation. Significant differences in taxation levels and retail prices between Member States continue to drive cross-border purchasing, parallel trade, and illicit trade in tobacco and nicotine products within the Union’s internal market and from third countries, thereby undermining the proper functioning of the internal market, the effectiveness of excise duty systems, public health…

RemovedRecital 23: (23) It is necessary to bring the minimum levels for fine-cut tobacco for the rolling of cigarettes closer to the minimum levels applicable to cigarettes, so as to better take account of the degree of competition existing between the two products, reflected in consumption patterns observed, as well as their equally harmful character.

RemovedRecital 23 a (new): (23a) As regards cigars and cigarillos, such products form a distinct and marginal market segment with a small overall share, limited substitution potential with cigarettes due to different consumer profiles and consumption patterns, and are predominantly produced by small and medium-sized enterprises (SMEs) as well as family-owned businesses deeply rooted in regional economies. To preserve proportionality and avoid disproportionate market disruptions and undue harm to that niche category, minimum excise duties should explicitly reflect those unique characteristics, such as low market volume, occasional rather than daily use, and minimal cross-product substitution, while maintaining a structurally and materially differentiated tax treatment from cigarettes.

RemovedRecital 23 b (new): (23b) Given the specificities of the cigar and cigarillo market, the Commission should, by ... [two years from the date of entry into force of this Directive], assess the impact of the new minimum excise duty rates applicable to cigars and cigarillos on SMEs and family-owned manufacturers, regional employment and supply chains, and substitution patterns. Where the assessment shows a disproportionate impact on SMEs, family-owned manufacturers or regional employment, the Commission should submit a legislative proposal to adjust the applicable minimum rates or the structure of those rates so as to ensure proportionality and to maintain an appropriate differential vis-à-vis cigarettes.

RemovedRecital 23 c (new): (23c) Given the specific characteristics of the nicotine pouches market, and considering its recent emergence, which is characterised by producers that are SMEs, Member States should provide for a phased implementation of the applicable excise framework, accompanied by appropriate administrative support and guidance for smaller economic operators.

RemovedRecital 25: (25) To capture the heterogeneity in current formats of heated tobacco, and to anticipate future formats, the setting of an overall minimum excise duty expressed as a percentage, or as an amount per kilogram or for a given number of items is the most appropriate for the functioning of the internal market.

RemovedRecital 26: (26) In order to have neutral conditions of competition in the tobacco sector, it is also necessary to set the minimum tax levels in a manner ensuring fair competition between product categories and avoiding distortions affecting legally operating economic actors, for waterpipe tobacco, heated tobacco, other manufactured tobacco and tobacco related products which can be seen as substitutes for tobacco products from a fiscal perspective.

RemovedRecital 27: (27) As regards liquids for electronic cigarettes, all those liquids should be subject to a minimum tax level, regardless of whether they contain nicotine. Not having to verify the nicotine content should make enforcement and supervision easier for national tax authorities. In light of the increased appeal of electronic cigarettes, strong and evidence-based measures should be implemented to address the use of those products, in particular by underage people.

RemovedRecital 29: (29) Transitional periods of six years for cigars, cigarillos, waterpipe tobacco, heated tobacco, other smoking tobacco, other manufactured tobacco, nicotine pouches and other nicotine products with excise duty increase after three years should be laid down to allow Member States to adapt smoothly to the levels of the overall excise duty, thus limiting possible side effects and ensuring a socially balanced adjustment, while taking into account any potential impact on vulnerable populations.

RemovedRecital 32: (32) Member States should be allowed to grant exemptions from excise duty for approved medical purposes, or make refunds of excise duty in respect of certain types of manufactured tobacco and tobacco related products depending on the use which is made of them.

RemovedRecital 33: (33) In order to assess the functioning of this Directive, the Commission should submit reports on a regular basis to the European Parliament and Council on the application of this Directive, examining in particular levels of taxation taking into account proper functioning of the internal market, public health, the protection of public revenues, the real value of the rates of excise duty, and the difference between excise revenues due and collected.

RemovedRecital 34: deleted / (deleted)

RemovedRecital 36: deleted

RemovedArticle 2 – paragraph 1 – point b: (b) cigars and cigarillos;

RemovedArticle 2 – paragraph 1 – point c: deleted

RemovedArticle 2 – paragraph 1 – point d – point i a (new): (ia) waterpipe tobacco

RemovedArticle 2 – paragraph 1 – point e: deleted

RemovedArticle 2 – paragraph 3: 3. For the purposes of this Directive, ‘raw tobacco’ means any form of harvested and dried tobacco that has undergone an initial processing stage.

RemovedArticle 2 – paragraph 5: 5. Products containing no tobacco and used exclusively for medical purposes and authorised, where required, by a competent Union or national authority, shall not be treated as manufactured tobacco or tobacco related products .

RemovedArticle 3 – paragraph 1 – point a: (a) rolls of tobacco which are intended to be smoked through a combustion process as they are and which are not cigars or cigarillos within the meaning of Article 4(1);

RemovedArticle 3 – paragraph 1 – point b: (b) rolls of tobacco which are intended to be smoked through a combustion process which, by simple non-industrial handling, are inserted into cigarette-paper tubes, or

RemovedArticle 3 – paragraph 1 – point c: (c) rolls of tobacco which are intended to be smoked through a combustion process which, by simple non-industrial handling, are wrapped in cigarette paper.

RemovedArticle 4 – paragraph 1 – introductory part: 1. For the purposes of this Directive, the following shall be deemed to be cigars or cigarillos if they can be and, given their properties and normal consumer expectations, are exclusively intended to be smoked through a combustion process as they are:

RemovedArticle 4 – paragraph 2: deleted

RemovedArticle 5 – paragraph 1 – point a: (a) tobacco which has been cut or otherwise split, twisted or pressed into blocks and is intended to be smoked through a combustion process without further industrial processing;

RemovedArticle 5 – paragraph 1 – point b: (b) tobacco refuse put up for retail sale which does not fall under Article 3(1), Article 4(1), Article 7(1) and Article 8 and which is intended to be smoked through a combustion process. For the purpose of this Article, tobacco refuse shall be deemed to be remnants of tobacco leaves and by-products obtained from tobacco processing or the manufacture of tobacco products.

RemovedArticle 5 – paragraph 2 a (new): 2a. Smoking tobacco which is sold or intended to be sold for use in a waterpipe for the production of emissions which are passed through a liquid before inhalation by the users shall be deemed to be waterpipe tobacco.

RemovedArticle 6: deleted / (deleted) / (deleted) / (deleted) / (deleted)

RemovedArticle 7 – paragraph 1: 1. For the purposes of this Directive, ‘heated tobacco’ means tobacco that is heated or otherwise activated by chemical reaction or some other means to produce an emission containing nicotine or other chemicals, which are intended for inhalation by users as they are, without combustion, other than via a waterpipe as referred to in Article 6(1).

RemovedArticle 7 – paragraph 1 a (new): 1a. Where heated tobacco is taxed per item in accordance with Article 20(1), point (b), an item of heated tobacco referred to in paragraph 1 of this Article shall, for excise duty purposes, be considered to be two items where the tobacco content is higher than 0,45 grams but not higher than 0,75 grams, to be three items where the tobacco content is higher than 0,75 grams but not higher than 1,05 grams, and to be one additional item for each 0,3 grams of tobacco content starting at 1,05 grams.

RemovedArticle 7 – paragraph 2 a (new): 2a. Products which fall under the definition of heated tobacco laid down in paragraph 1 of this Article and which can also be deemed to be cigarettes as defined in Article 3, or cigars or cigarillos as referred to in Article 4, or smoking tobacco as defined in Article 5, shall be subject in each Member State to whichever excise duty is higher in accordance with the national law of that Member State.

RemovedArticle 7 – paragraph 3: deleted

RemovedArticle 7 – paragraph 4: deleted

RemovedArticle 7 – paragraph 5: deleted

RemovedArticle 9 – paragraph 1 – point a: (a) liquids containing nicotine but not tobacco that can be used in electronic cigarettes or similar vaporising devices or to refill electronic cigarettes or similar vaporising devices;

RemovedArticle 9 – paragraph 1 – point b: (b) liquids not containing nicotine or tobacco which are intended to be used in electronic cigarettes or similar vaporising devices or to refill electronic cigarettes or similar vaporising devices.

RemovedArticle 9 – paragraph 2: 2. For the purposes of this Directive, ‘electronic cigarette’ means a product that can be used for consumption of vapour, or any component of that product that can be disposable or refillable, or rechargeable.

RemovedArticle 10 – paragraph 1: 1. For the purposes of this Directive, ‘nicotine pouches’ means products containing nicotine but not tobacco intended for oral intake, or plant fibres or equivalent substrate, which are presented in sachet portions or porous sachets or in an equivalent format and which do not contain tobacco.

RemovedArticle 10 – paragraph 2: 2. For the purposes of this Directive, ‘other nicotine products’ means products for human consumption containing nicotine and not containing tobacco which can be used for the intake of nicotine in the human body, other than nicotine pouches as defined in paragraph 1 of this Article and heated tobacco as defined in Article 7(1) and liquids for electronic cigarettes as defined in Article 9(1).

RemovedArticle 11 – paragraph 1: A natural or legal person established in the Union who manufactures a tobacco or tobacco related product or has such a product designed or manufactured and markets that product under his name or trademark shall be deemed to be a manufacturer.

RemovedArticle 12 – paragraph 2: 2. The Union rate used to determine the minimum tax level of a product, as provided for in Article 16, Article 20(2) and Article 22(2) shall be adjusted by increasing or decreasing the base amount in euro by the percentage change over the preceding 3 calendar years in the all-items annual Union average value of the harmonised index of consumer prices excluding energy and unprocessed food as published by Eurostat. The Union rate used to determine the minimum tax level of a product shall not be adjusted by more than 9 %.

RemovedArticle 12 – paragraph 3: 3. The part of minimum rate expressed as an amount either per kilogram, per millilitre, or per a given number of items applicable in a Member State shall be the sum of two thirds of the Union rate for the corresponding category multiplied by the price level index divided by one hundred plus one third of the Union rate for the corresponding category. Price level index means the index published by Eurostat expressing the price level of a given Member State for actual individual consumption relative to the weighted Union average. Member States shall use the price level index of the year prior to the year of adjustment.

RemovedArticle 12 – paragraph 4 a (new): 4a. For calculating the adjustment under paragraphs 1, 2 and 4, the following formula shall apply: / where: y is the first year the adjusted rate shall apply, and HICP is the harmonised index of consumer prices.

RemovedArticle 12 – paragraph 5: deleted

RemovedArticle 12 – paragraph 6: 6. Paragraph 2 shall apply from 1 January 2036.

RemovedArticle 16 – paragraph 1: The overall excise duty on cigarettes shall represent at least 60 % of the weighted average retail selling price of cigarettes released for consumption. That excise duty shall not be less than the Union rate of EUR 200 per 1000 cigarettes, adjusted in accordance with Article 12, irrespective of the weighted average retail selling price.

RemovedArticle 16 – paragraph 2: However, Member States which levy an excise duty of at least the Union rate of EUR 250 per 1000 cigarettes, adjusted in accordance with Article 12, on the basis of the weighted average retail selling price need not to comply with the requirement of an overall excise duty of 60 % of the weighted average retail selling price of cigarettes released for consumption requirement set out in the first subparagraph of this Article.

RemovedArticle 19 – paragraph 1 – point a: (a) cigars and cigarillos;

RemovedArticle 19 – paragraph 1 – point b: deleted

RemovedArticle 19 – paragraph 1 – point c: deleted

RemovedArticle 19 – paragraph 1 – point d: (d) smoking tobacco, including: / (i) fine-cut tobacco for the rolling of cigarettes; / (ii) waterpipe tobacco; / (iii) other smoking tobacco;

RemovedArticle 19 – paragraph 1 – point e: deleted

RemovedArticle 20 – paragraph 1 – subparagraph 1 – point b: (b) a specific duty expressed as an amount per kilogram or, in the case of cigars and cigarillos, and heated tobacco, alternatively for a given number of items; or

RemovedArticle 20 – paragraph 4: 4. By way of derogation from paragraph 2, from 1 January 2028 until 31 December 2031 Member States shall ensure that excise duty rates are at least EUR 12 per 1 000 items or per kilogram or 5% of the retail selling price inclusive of all taxes for cigars and cigarillos, at least EUR 22 per kilogram or 20% of the retail selling price inclusive of all taxes for other smoking tobacco and waterpipe tobacco, at least EUR 58 per 1 000 items or EUR 83 per kilogram or 20 % of the retail selling price inclusive of all taxes for heated tobacco, and at least EUR 0 per kilogram or 0% of the retail selling price inclusive of all taxes for other manufactured tobacco.

RemovedArticle 20 – paragraph 5: 5. By way of derogation from paragraph 2, from 1 January 2032 until 31 December 2033 Member States shall ensure that excise duty rates are at least EUR 24 per 1 000 items or per kilogram or 10 % of the retail selling price inclusive of all taxes for cigars and cigarillos, at least EUR 71,5 per kilogram or 25% of the retail selling price inclusive of all taxes for other smoking tobacco, at least EUR 54 per kilogram or 25% of the retail selling price inclusive of all taxes for waterpipe tobacco, at least EUR 68 per 1 000 items or EUR 97 per kilogram or 30 % of the retail selling price inclusive of all taxes for heated tobacco, and at least EUR 71,5 per kilogram or 25% of the retail selling price inclusive of all taxes for other manufactured tobacco.

RemovedArticle 22 – paragraph 1 – subparagraph 1 – point a a (new): (aa) in the case of liquids for electronic cigarettes, a specific duty expressed as an amount per millilitre;

RemovedArticle 22 – paragraph 1 – subparagraph 1 – point b: (b) in the case of nicotine pouches and other nicotine products, a specific duty expressed as an amount per kilogram, or alternatively for a given number of items;

RemovedArticle 22 – paragraph 1 – subparagraph 1 – point c: (c) a mixture of the excise duties under points (a) and (aa), or points (a) and (b), combining an ad valorem element and a specific element.

RemovedArticle 22 – paragraph 2: 2. The overall excise duty on liquids for electronic cigarettes, whether they contain nicotine or not, expressed as a percentage or as an amount per millilitre, shall be at least 30 % of the retail selling price inclusive of all taxes or the Union rate of EUR 0,30 per millilitre, adjusted in accordance with Article 12. / (deleted) / (deleted)

RemovedArticle 22 – paragraph 3 – subparagraph 1: Member States shall be allowed a transitional period until 31 December 2032 in order to reach the rates or minimum amounts laid down in paragraph 4 of this Article.

RemovedArticle 22 – paragraph 3 – subparagraph 2 – introductory part: From 1 January 2030 the overall excise duty, expressed as a percentage, as an amount per kilogram or as an amount for a given number of items, shall be at least equivalent to the rates or minimum amounts laid down for:

RemovedArticle 22 – paragraph 3 – subparagraph 2 – point a: (a) nicotine pouches: 20 % of the retail selling price including all taxes or the Union rate of EUR 30 per kilogram;

RemovedArticle 22 – paragraph 3 – subparagraph 2 – point b: (b) other nicotine products: 20 % of the retail selling price including all taxes or the Union rate of EUR 25 per kilogram or EUR 0,25 per millilitre.

RemovedArticle 22 – paragraph 4 – introductory part: 4. From 1 January 2033 Member States referred to in the first sentence of paragraph 3 of this Article, shall ensure that the overall excise duty, expressed as a percentage, as an amount per kilogram or for a given number of items, shall be at least equivalent to the rates or minimum amounts laid down for:

RemovedArticle 22 – paragraph 4 – point a: (a) nicotine pouches: 28 % of the retail selling price including all taxes or the Union rate of EUR 50 per kilogram, adjusted in accordance with Article 12;

RemovedArticle 22 – paragraph 4 – point b: (b) other nicotine products: 35 % of the retail selling price including all taxes or the Union rate of EUR 35 per kilogram or EUR 0,25 per millilitre.

RemovedArticle 26 – paragraph 2 – subparagraph 1 – point a a (new): (aa) manufactured tobacco and tobacco related products which are destroyed under administrative supervision;

RemovedArticle 28 – paragraph 1 – subparagraph 2: The report by the Commission shall examine minimum levels of taxation taking into account the proper functioning of the internal market, public health, the real value of the rates of excise duty taking into account also the purchasing power in individual Member States, and the wider objectives of the Treaty on the Functioning of the European Union. The Commission shall also monitor the impact of revised minimum rates taking into account illicit trade, employment in affected sectors, and regional economic disparities. The report shall assess the application and the impact of the provisions regarding raw tobacco as regards tax evasion and fraud.

RemovedArticle 28 – paragraph 1 – subparagraph 3: Member States shall, upon request, submit to the Commission available information needed to prepare the report.

RemovedArticle 28 – paragraph 4: deleted

RemovedArticle 28 a (new): Article 28a / By … [two years from the date of entry into force of this Directive], the Commission shall assess the impact of the new minimum excise duty rates applicable to cigars and cigarillos on SMEs, family-owned manufacturers, regional employment, supply chains, and substitution patterns. Where the assessment shows a disproportionate adverse impact on SMEs, family-owned manufacturers or regional employment, the Commission shall submit a legislative proposal to adjust the applicable minimum rates or the structure of those rates so as to ensure proportionality and to maintain an appropriate differential vis-à-vis cigarettes.

RemovedArticle 30: deleted / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted)

RemovedThe Tobacco Taxation Directive (TTD) recast aims to update the rules on tobacco taxation both in terms of minimum excise duty rates as well as by including novel tobacco related products that have emerged since the last TTD review. Given the dual objective of ensuring both the proper functioning of the internal market and a high level of health protection, it is necessary to find an ambitious but also feasible and realistic equilibrium. The Rapporteur of course understands the need for a review of the tobacco taxation rules in the EU - the minimum rates are becoming outdated due to wage increases and inflation, new products have entered the market and a certain level of harmonization across EU Member States is desirable. Moreover, tobacco taxation can have an impact on public health.

RemovedHowever, it is essential to strike the right balance. Raising the minimum rates of taxation must be done in a careful and thought-out way, taking into account all possible effects on consumers, national tax authorities and the tobacco products market. The effectiveness of excise duties depends not only on the level of minimum rates, but also on the pace, structure and predictability of their implementation. Excessively abrupt or rigid adjustments may distort legal markets and increase incentives for illicit trade, thereby undermining both revenue collection and enforcement objectives. That is why the Rapporteur proposes a more gradual and pragmatic increase of the minimum rates.

RemovedA central consideration of the Report is the differentiated treatment of products based on their characteristics, health risks and patterns of use. The Commission proposal recognises the diversity of tobacco and nicotine products and introduces specific tax structures for individual categories. The Rapporteur supports this differentiated approach and considers it essential to always consider the specificities of different tobacco products.

RemovedThe Report also addresses the balance between public health objectives and fiscal structure. Evidence suggests that some noncombustible products may present lower risks than traditional cigarettes and may contribute to reduced consumption of the most harmful products. The Rapporteur therefore believes that excise duty policy should avoid a one-size-fits-all approach and should reflect relative risk profiles in a proportionate manner.

RemovedThe Commission introduced two new mechanisms in the TTD - the indexation of minimum rates that takes place every three years and the price level index. The Rapporteur considers both tools to be useful for future-proofing the TTD. The Report adapted the indexation tool by limiting it to core inflation and by introducing a cap of a maximum adjustment by 12 % for better predictability. The price level index ensures a fairer determination of the minimum rates based on how high the general price level is in a given Member State. The Rapporteur agrees with this logic and decided that the price level index’s weight in the calculation of the final minimum rate should be increased from one third to one half.

RemovedFinally, the Report highlights the role of transitional periods in facilitating the smooth implementation of the new legal framework. Transitional regimes allow Member States and market participants to adapt progressively to increased minimum rates, thereby reducing the risk of market disruption and higher illicit trade. Therefore, the Rapporteur decided to prolong the transitional period by one year until the end of 2032.

RemovedOn this basis, the Report proposes targeted adjustments aimed at strengthening the proportionality, coherence and practical effectiveness of the Commission proposal, while fully respecting its core objectives.