Excise Duties on Tobacco
EU legislation on excise duties for manufactured tobacco defines:
the categories of manufactured tobacco products (cigarettes and “other tobacco products”)
the principles of taxation
the minimum rates and structures to be applied.
Manufactured tobacco is also subject to the common provisions for excisable goods under EU law.
Directive 2011/64/EU requires Member States to levy a minimum rate of excise duties on cigarettes.
This minimum rate must consist of:
A specific component of between 7.5% and 76.5% of the total tax burden (TTB) - expressed as a fixed amount per 1000 cigarettes
An ad valorem component - expressed as a percentage of the maximum retail selling price
In addition, the overall excise rate must be:
At least EUR 90 per 1000 cigarettes
At least 60% of the weighted average retail selling price
Member States that apply excise duty of EUR 115 or more, however, do not need to comply with the 60% criterion above.
EU legislation only sets harmonized minimum rates. Member States are free to apply excise duty rates above these minima, according to their own national needs.
Specific provisions exist to allow Portugal to apply a reduced rate up to 50% less than the required overall minimum excise duty on cigarettes consumed in the most remote regions of the Azores and Madeira.
Other tobacco products
Directive 2011/64/EU also sets down minimum excise duty rates for manufactured tobacco other than cigarettes.
The structure for taxing "other tobacco products" is slightly different than for cigarettes.
Member States can choose between applying a specific component or an ad valorem component, or if they wish, they may apply a mixture of the two.
Minimum rates are set out for three distinct categories of "other tobacco products"