In the European Commission's work programme for 2021, the Commission announced a revision of the Council Directive 2011/64/EU on excise rules for tobacco ('The Tobacco Taxation Directive').

On 16 July 2025, the European Commission tabled a proposal for a revision of the Tobacco Taxation Directive, alongside changes to the horizontal Excise Duty Directive. The Commission considers that the current minima tax rates set by the directive have lost their effect as a large number of Member States tax most tobacco products above the minima. Additionally, there is no automatic indexation mechanism, and the minimum rates have not been adjusted for inflation since it came into force over a decade ago. This has gradually weakened the rates' price-signalling role to consumers and eroded their efficacy over time, the Commission argues. The wide price level differences between the different Member States has also led to extensive cross-border shopping in some areas. Several new types of tobacco products are also not fully covered by the current directive.

To reflect the new developments in the tobacco market, and to ensure the efficiency of the directive, the European Commission proposes the following key changes:

• The Commission proposes to expand the scope of the directive to new products, adding harmonised definitions on e.g. heated tobacco, other manufactured tobacco, liquids for e-cigarettes, nicotine pouches and other nicotine products. To fight the illicit trade of tobacco, raw tobacco is also proposed to be included within the scope of the directive.

• Higher minimum tax rates are proposed across the board for in-scope products. The increase in rates aims to ensure that the Directive can play an active role in reducing tobacco use. However, minimum rates would be adjusted every three years to reflect inflation and differences in price levels between Member States.

The proposal is subject to the special legislative procedure, requiring unanimous support for its adoption in Council, following consultation of the European Parliament.

In the European Parliament, the proposal was assigned to the Economic and Monetary Affairs Committee (rapporteur: Tomáš Kubín, Patriots for Europe, Czechia).

In Council, the negotiations are on-going. The Danish Presidency of the Council prepared a first compromise text for consideration in December 2025.

References:

• EP Legislative Observatory, Procedure file on the Revision of the Tobacco Taxation Directive, 2025/0580 (CNS)
• European Commission, Revision of excise rules for tobacco, webpage
• European Commission, Proposal for a Council Directive on the structure and rates of excise duty applied to tobacco and tobacco related products, July 2025
• European Commission, Impact Assessment, July 2025
• Council of the EU, Ecofin report on tax issues, December 2025

Further reading:

• European Parliamentary Research Service, Revision of the Tobacco Taxation Directive, Legislative briefing, September 2025

Author: Pieter Baert, Members' Research Service, legislative-train@europarl.europa.eu