1. Tobacco tax harmonization in the European Union
European Commission
DG Taxation and Customs Union
Unit C2 Indirect Taxation

2. Agenda Introduction Facts EU tobacco market Why harmonizing?
How harmonizing?

3. The EU taxation and customs Union
28 Member States
510 million people
Single market
Fundamental freedoms
(of goods, people, services and money)
Candidate Countries
Albania
the former Yugoslav Republic of Macedonia
Montenegro
Serbia
Turkey

4. Facts - EU tobacco market 2015
Released for consumption
493 billion cigarettes
ton smoking tobacco
Revenue from excise duty
75 billion euro cigarettes
9 billion euro smoking tobacco

5. Why harmonize excise duties?
Reasons:
to ensure the functioning of the internal market and to avoid distortions of competition;
to contribute to a high level of health protection
to ensure revenue of Member States.

6. 1. Tax burden cigarettes 2016, in % of the Weighted Average Price

7. 2. Consumption levels for cigarettes

8. 3.1 Total revenue excise duties cigarettes

9. 3.2 Average revenue excise duties cigarettes

10. Structures Rates Harmonization of excise duties – How?
Harmonisation Approximation
(Structure) (Minimum rates)

11. 1. Structure
Ad Valorem
Specific

12. 2. Rates – minimum overall excise duty
Currently minimum level of overall excise duty on cigarettes:
at least 60% of the WAP of cigarettes released for consumption
this amount must be at least EUR 90 per 1,000 cigarettes
MS which levy at least EUR 115 per 1,000 cigarettes, do not need to comply with the 60% criterion mentioned in (1) above
transitional period until for some MS

13. 2.1 Minimum rates 2016
Decreasing the tax differentials within the EU; minimum rates:
2010: €64/ for ALL cigarettes;
2014: €90/1000 for ALL cigarettes;
transitional periods for Member States with third countries land borders until 2018.
2014

14. Experiences in new Member States
In line with the overall developments in the EU-28:
Increase or stable total revenue of excise duty of cigarettes;
Decline of consumption of cigarettes;
Increase or stable excise duty rates;
Increase of average excise duty collected per 1000 cigarettes.

15. Romania

16. Conclusion Facts EU tobacco market Reasons to harmonize:
Internal market and avoid distortion of competition
Health protection
Revenue collection
Ways of harmonization in EU tobacco legislation:
Harmonized tax structure
Approximation: Minimum rates

17. Thank you for your attention