Europe’s nicotine market has changed considerably since the EU’s tobacco excise framework was last substantially updated. Cigarettes remain the dominant source of tobacco-related harm, but heated tobacco products, e-cigarettes and nicotine pouches now form part of a much more diverse market.
The European Commission is attempting to respond through its proposed revision of the Tobacco Taxation Directive (TTD). The proposal would bring several newer nicotine products, including nicotine pouches, within an EU-wide excise framework for the first time. Yet negotiations between Member States are proving difficult, with disagreement over how heavily these products should be taxed.
The debate raises a wider policy question: can Europe create greater tax harmonisation while still recognising meaningful differences between nicotine products?
Bringing New Nicotine Products Into the EU Framework
The Commission proposed its recast of the Tobacco Taxation Directive in July 2025. The reform would increase existing minimum tobacco excise rates while creating new minimum rates for e-cigarettes, heated tobacco products and nicotine pouches. The Commission argues that the existing framework no longer reflects the modern market and that harmonisation could improve regulatory control while reducing differences between Member States.
There is a reasonable case for updating rules written before many of today’s nicotine products became widely available. Clear categories and common minimum standards can reduce regulatory uncertainty and help address significant differences between national tax systems.
The more difficult question is how those categories should be taxed relative to one another.
Member States Remain Divided
Recent reporting by The Examination shows how difficult that question has become. The Commission initially proposed a minimum tax that would amount to approximately €1.14 for a can of nicotine pouches, depending on nicotine content. During subsequent Council negotiations, a Cypriot presidency proposal reduced the level to approximately €0.64.
Even the lower proposal would represent a substantial increase in some markets. The Examination estimates Sweden’s current tax at roughly €0.15 per 20-pouch can, while Italy’s is around €0.18 and Portugal has established a rate of approximately €0.52. Around half of EU Member States currently tax nicotine pouches, while the regulatory status of the products also differs considerably between countries.
Sweden has opposed the proposed minimum pouch tax, contributing to wider disagreement over the Directive. Because agreement in the Council requires unanimity, these differences matter. As of September 2026, the negotiations remain ongoing and the proposed rates should not be treated as final EU policy.
Should Taxation Reflect Relative Risk?
Taxation is an established tool for discouraging cigarette consumption and generating public revenue. It can also influence the affordability and attractiveness of nicotine products, particularly among young people.
However, applying taxation to a diverse nicotine market introduces another consideration: products do not necessarily present equivalent risks.
For adults who smoke, the relevant public-health comparison is often continued cigarette smoking. If a non-combustible alternative carries a lower risk than cigarettes, the price difference between the products may influence whether some consumers consider switching. Tax systems that substantially narrow that difference could therefore affect consumer behaviour, although the scale of this effect requires careful evaluation.
This does not mean lower-risk products should necessarily be exempt from taxation. Governments may reasonably use excise duties to address youth uptake, nicotine dependence and other public-health concerns. The challenge is determining whether the relative tax burden should also recognise differences between combustible and non-combustible products.
Harmonisation Does Not Have to Mean Uniformity
The Commission has a legitimate concern about regulatory fragmentation. Different national tax systems can complicate enforcement, create cross-border price differences and make the Single Market more difficult to manage. The Commission’s proposal therefore seeks common minimum rates while allowing Member States some flexibility to adapt taxation to national circumstances.
But greater harmonisation does not necessarily require equivalent treatment of every nicotine category.
A common European framework could establish clear definitions and minimum standards while retaining meaningful distinctions between cigarettes, heated tobacco, e-cigarettes, nicotine pouches and other products. Those distinctions could reflect evidence on product characteristics, patterns of use and relative risk, while allowing policymakers to maintain strong safeguards against youth access.
The current negotiations provide an opportunity to consider how such differentiation should work in practice.
Avoiding Arbitrary Risk Ratios
The debate also requires caution when translating relative risk into tax rates.
Some stakeholders have proposed specific percentages for how nicotine pouches and heated tobacco products should be taxed relative to cigarettes. The Examination, for example, reports a Tax Foundation representative arguing that nicotine pouches should face 10% of the cigarette tax burden and heated tobacco products 25%. The publication notes that there is no established scientific basis for those specific figures.
Risk-proportionate taxation should therefore not mean assigning precise tax percentages to products simply because they appear to correspond with estimates of relative health risk.
Tax design involves public health, consumer behaviour, affordability, government revenue, illicit trade and market conditions. Scientific evidence can inform those decisions, but it cannot automatically produce a single correct tax rate.
An Opportunity for More Coherent EU Policy
The difficulty Europe is experiencing in revising the Tobacco Taxation Directive reflects a broader challenge facing nicotine regulation. Member States increasingly agree that newer products require clearer rules, but there is less agreement about how those rules should account for differences between products.
For GINN, an effective framework should be capable of pursuing several objectives at the same time: protecting young people, establishing appropriate product categories, supporting effective enforcement and recognising that combustible and non-combustible nicotine products should not automatically be treated as equivalent.
The current TTD negotiations are still evolving. The final outcome may differ substantially from both the Commission’s original proposal and subsequent Council drafts.
That makes the debate worth following closely. Europe has an opportunity to modernise a tax framework designed for an earlier tobacco market. The measure of success should extend beyond whether Member States can agree on common minimum rates. It should also consider whether the resulting system is coherent, evidence-based and capable of responding to differences in product risk.
Sources: European Commission, Revision of the Tobacco Taxation Directive (proposal); The Examination, “EU countries clash over nicotine pouch taxes, stalling broader tobacco talks,” 3 September 2026.
