Proposed EU-wide changes to tobacco taxation would introduce some of the steepest excise increases ever discussed at European level, with cigars facing rises of more than 1,000 percent.
Cyprus and several other member states warn that the measures risk fuelling smuggling, distorting the market and sharply increasing retail prices.
Unprecedented excise increases proposed by the Commission
The European Commission is proposing a radical overhaul of tobacco taxation, centred on exceptionally large excise duty increases:
- 139 percent increase on cigarettes
- 258 percent increase on roll-your-own tobacco
- More than 1,000 percent increase on cigars
The proposals also introduce, for the first time, a unified taxation framework for electronic cigarettes and nicotine products, with the stated objective of harmonising rates across the European Union and reducing consumption, particularly among younger age groups.
The measures form part of a revision of the Tobacco Taxation Directive and are accompanied by a proposed new EU own resource, known as TEDOR, with estimated additional revenues exceeding €15 billion.
Structural changes to the tobacco market
Beyond excise duties, the Commission is proposing measures that would fundamentally reshape the tobacco market. These include the abolition of filters, a sharp reduction in points of sale, and a gradual restriction of tobacco availability through retail outlets.
Under the proposals, tobacco sales would increasingly be transferred away from the commercial retail sector and towards non-profit organisations.
The Commission maintains that taxation is the most effective means of reducing smoking, attributing 40 percent of the decline in tobacco use over the past decade to fiscal measures.
Concerns from southern EU member states
The initiative has prompted concern among southern EU member states, including Greece, which warn that such steep increases could accelerate illicit trade and undermine the competitiveness of domestic tobacco industries.
Despite these reservations, the Commission is pushing to finalise the proposal by the summer of 2026, while northern member states are calling for stricter and more uniform taxation across the single market.
Retail sector warnings over price impact in Cyprus
Retailers in Cyprus warn that the proposed increases would have immediate and far-reaching consequences, particularly for kiosks and tobacco vendors.
In a statement, the Association of Continuous Service Shops (SYKADE) said that under the proposals the minimum excise duty on cigarettes would rise from €90 to €215 per 1,000 cigarettes, reflecting a 139 percent increase. For roll-your-own tobacco, the minimum tax would rise from €60 to €215 per kilogram, an increase of 258 percent.
According to SYKADE, retail cigarette prices in Cyprus would rise to €7–€7.50 per pack, while roll-your-own tobacco would reach approximately €13 per package.