In a statement published on Friday, The European Commission ruled out any immediate move towards an EU vape tax last week, but that doesn’t mean the idea is dead.
The announcement marked the publication of a year-long investigation into a possible revision of the EU Tobacco Excide Directive, which had been undertaken at the request of EU Governments concerned that vaping products were outside of the scope of the current excise framework.
The study concluded that the hypothetical loss of excise revenue to EU Member States from smokers switching to e-cigarettes was around €2 billion, less than 2.5% of the current revenue from excise applied to cigarettes.
However, it said that a positive tax on e-cigarettes would only contribute between €0.3-0.5 billion to Member State budgets, indicating that they do not believe that equalizing vape taxation with cigarette taxation is either desirable or possible.
But while the study has led the Commission to conclude that a tax is not desirable for now, that does not mean it cannot happen in the future. It believes that while sufficient data to support a harmonized tax does not exist now, it may become available thanks in part to the notification requirements under Article 20 of the Tobacco Products Directive.
In its announcement, the Commission called for a further study to assess this data collected and look at whether future amendments to the Directive might include e-cigarettes and heat-not-burn products. Just a few days later, DG TAXUD – the Commission department charged with overseeing EU excise policy – wrote to stakeholders on its mailing list informing them that a new study would take place this year.
We received a letter and have indicated our willingness to help the Commission in its work. As this process unfolds throughout the year, we will of course keep our clients updated on progress and provide any insight we get.