Changes from report parliamentary committee draft to plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

▸10 unchanged paragraphs

on the proposal for a Council directive on the structure and rates of excise duty applied to tobacco and tobacco related products (recast)

(COM(2025)0580 – C100207/2025 – 2025/0580(CNS))

(Special legislative procedure – consultation – recast)

The European Parliament,

– having regard to the Commission proposal to the Council (COM(2025)0580),

– having regard to Article 113 of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C100207/2025),

– having regard to the reasoned opinion submitted, within the framework of Protocol No 2 on the application of the principles of subsidiarity and proportionality, by the Italian Chamber of Deputies, asserting that the draft legislative act does not comply with the principle of subsidiarity,

– having regard to the Interinstitutional Agreement of 28 November 2001 on a more structured use of the recasting technique for legal acts,

– having regard to the letter of 11 December 2025 from the Committee on Legal Affairs to the Committee on Economic and Monetary Affairs in accordance with Rule 113(3) of its Rules of Procedure,

– having regard to Rules 113 and 84 of its Rules of Procedure,

Changed– having regard to the report of the Committee on Economic and Monetary Affairs (A100000/2026),(A10-0161/2026),

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A. whereas, according to the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission, the Commission proposal does not include any substantive amendments other than those identified as such in the proposal and whereas, as regards the codification of the unchanged provisions of the earlier acts together with those amendments, the proposal contains a straightforward codification of the existing texts, without any change in their substance;

1. Approves the Commission proposal as adapted to the recommendations of the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission and as amended below;

2. Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union;

3. Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4. Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

5. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Title 1: on the structure and rates of excise duty applied to raw tobacco, manufactured tobacco and tobacco related products (recast)

Change 1

RemovedThe European Commission decided to apply the Excise Movement and Control System (EMCS) to raw tobacco and the rapporteur agrees with this approach. The Directive now deals with not only manufactured tobacco as before, but newly also with raw tobacco. The rapporteur therefore considers it appropriate to slightly amend the title of the proposal so that it contains the words „raw tobacco“.

AddedCitation 5: Having regard to the opinion of the European Economic and Social Committee1a, / 1a OJ C, C/2026/2543, 22.5.2026, ELI: http://data.europa.eu/eli/C/2026/2543/oj.

RemovedCitation 5: Having regard to the opinion of the European Economic and Social Committee1a, / 1a Opinion of 18 February 2026 (not yet published in the Official Journal).

AddedRecital 2: (2) Since the adoption of Directive 2011/64/EU, the tobacco market has changed significantly. New products functioning as alternatives for manufactured tobacco and containing tobacco or nicotine have been placed on the market. In response, Member States have introduced different national measures as regards those alternatives, which pose a challenge to the proper functioning of the internal market. In the interest of uniform and fair taxation, those alternatives for manufactured tobacco should be subject to a harmonised excise duty structure and harmonised minimum excise duty rates in the Union. Proper implementation of the ‘less harm, less tax’ principle requires that tax policies reflect the different levels of health risk associated with tobacco and nicotine products, while allowing Member States the necessary flexibility to incorporate that principle into their national taxation frameworks. This Directive should not harmonise taxation rules on tobacco for oral use, prohibited from being placed on the market in accordance with Article 17 of Directive 2014/40/EU of the European Parliament and of the Council. For clarity, this Directive should not harmonise taxation rules on tobacco for oral use placed on the market of a Member State in accordance with Article 151 of the Act of Accession of Austria, Finland and Sweden.

RemovedThe rapporteur wanted to formally take note of the opinion of the European Economic and Social Committee that was adopted recently.

AddedRecital 3: (3) It is necessary to ensure that the Union’s fiscal legislation on tobacco and tobacco related products continues to ensure the proper functioning of the internal market and, at the same time, a high level of human health protection, as required by Article 168 of the Treaty on the Functioning of the European Union, thereby ensuring that public health considerations are fully integrated into the design and implementation of fiscal measures, bearing in mind that tobacco and tobacco related products can cause serious harm to health , that Europe’s Beating Cancer Plan2 set the goal of reaching a tobacco-free Europe and that the Union is Party to the World Health Organization’s Framework Convention on Tobacco Control . To achieve this twin objective the EU and the Member States should step up their efforts to fight illicit tobacco trade, notably illicit imports of tobacco and related products from third countries3, taking into account the link between high excise taxes, illicit trade, and related criminal activities, as highlighted in the 2025 EU Serious and Organised Crime Threat Assessment published by EUROPOL, and the broader impact of illicit tobacco trade on internal security and the fight against serious and organised crime and financing of criminal activities in the EU. In that context, particular consideration should be given to Member States facing specific geographic circumstances, which create further incentives for illicit tobacco trade, thereby undermining public re…

RemovedRecital 2: (2) Since the adoption of Directive 2011/64/EU, the tobacco market has changed significantly. New products functioning as substitutes for manufactured tobacco and containing tobacco or nicotine have been placed on the market. In response, Member States have introduced different national measures as regards those substitutes which pose a challenge to the proper functioning of the internal market. In the interest of uniform and fair taxation those substitutes for manufactured tobacco should be subject to a harmonised excise duty structure and harmonised minimum excise duty rates in the Union. This Directive should not harmonise taxation rules on tobacco for oral use, prohibited from being placed on the market in accordance with Article 17 of Directive 2014/40/EU of the European Parliament and of the Council. For clarity, this Directive should not harmonise taxation rules on tobacco for oral use placed on the market of a Member State in accordance with Article 151 of the Act of Accession of Austria, Finland and Sweden.

RemovedRecital 3: (3) It is necessary to ensure that the Union’s fiscal legislation on tobacco and tobacco related products continues to ensure the proper functioning of the internal market and, at the same time, a high level of human health protection, as required by Article 168 of the Treaty on the Functioning of the European Union, bearing in mind that tobacco and tobacco related products can cause serious harm to health , that Europe’s Beating Cancer Plan2 set the goal of reaching a tobacco-free Europe and that the Union is Party to the World Health Organization’s Framework Convention on Tobacco Control . To achieve this twin objective the EU and the Member States should step up their efforts to fight illicit tobacco trade, notably illicit imports of tobacco and related products from third countries3 . New products (liquids for e-cigarettes, other manufactured tobacco, nicotine pouches and other nicotine products) have increasing popularity, especially among young people, and besides the intrinsic public health risk these products represent, they also have the potential of opening the way towards conventional smoking. On the other hand, studies3a show that new products are generally less harmful than traditional combustible cigarettes and can help smokers transition away from them more smoothly. / 3a Ambildhok, Kadambari A et al. Assessing the Health Impacts of Heated Tobacco Products Compared to Traditional Tobacco Use: A Systematic Review of Current Evidence. Cureus 17(10). DOI: 10.7759/…

Recital 3 a (new): (3a) Currently, the cost of living is rising across the Union. When setting new minimum levels of taxation for tobacco products, it is essential to consider the regressive nature of tobacco taxes and the disproportionate financial burden of tobacco use on low-income population groups. Given the higher prevalence of smoking among lower-income households and the significantly larger share of their earnings spent on tobacco products, they are much more affected by tax increases than higher-income households.

Change 2

AddedRecital 4: (4) One of the objectives of the Treaty on European Union is to maintain an economic union, whose characteristics are similar to those of a domestic market, within which there is healthy competition. As regards manufactured tobacco and tobacco related products, the achievement of this aim presupposes that the application in the Member States of taxes affecting the consumption of products in the relevant sector does not distort conditions of competition and does not impede their free movement within the Union, and that their price increases do not result in fostering competition from outside the Union through lower-quality products, which would be detrimental not only to Union industry but also to public health objectives.

Recital 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.

Change 3

ChangedRecital 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.

Change 4

ChangedRecital 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,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 ,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 canis sold, or intended to be usedsold, 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.

Change 5

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 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.

AddedRecital 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 13: (13) To avoid its obsolescence over time, the minimum Union rate of excise duty for each product category should be updated every three years 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 12 % 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.

AddedRecital 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 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 adequate 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.

AddedRecital 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.

AddedRecital 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.

AddedRecital 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.

AddedRecital 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…

Recital 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.

Change 6

RemovedWe do not consider cigars/cigarillos to be potential substitutes for cigarettes. Both product groups are characterized by very different patterns of consumption (frequency, occasion), consumer demography, addiction rates etc.

AddedRecital 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 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 undue harm to this niche category, minimum excise duties should explicitly reflect these 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.

AddedRecital 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 b (new): (23b) Given the specificities of the cigar and cigarillo market, the Commission should, by ... [two years after the 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 disproportionate impacts 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.

AddedRecital 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.

Recital 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.

Change 7

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. According to a recent European School Survey Project on Alcohol and Other Drugs, nearly half of European students have tried electronic cigarettes at least once in their lifetime and 22 % of students had used it in the past month.1a Taxation policy should therefore reflect the rising appeal of electronic cigarettes to young people. / 1a European Union Drugs Agency. European School Survey Project on Alcohol and Other Drugs (ESPAD). euda.europa.eu. p. 18. Available from: https://www.euda.europa.eu/publications/data-factsheets/espad-2024-key-findings_en

AddedRecital 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 29: (29) Transitional periods of five 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.

AddedRecital 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 34: (34) For reasons of legal clarity and transparency, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission to amend the minimum Union rates set by this Directive to reflect changes in harmonised index of consumer prices excluding energy and unprocessed food (core inflation). It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making4 . In particular, to ensure equal participation in the preparation of delegated acts, the Council receives all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

AddedRecital 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.

AddedRecital 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.

AddedRecital 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.

AddedRecital 34: deleted / (deleted)

Recital 36: deleted

Change 8

RemovedIn our opinion, it is not sound legal drafting to premise in the current recast what decisions the Commission should take in the future. Moreover, it is unclear why equalisation of the taxation levels for different product categories is needed and desirable in the first place.