EU Nicotine Tax Negotiations: New Compromise Sets Out Phased Duties for Nicotine Pouches

The European Union’s negotiations over tobacco and nicotine taxation have entered an important stage, with a new Council Presidency compromise proposing phased minimum excise duties for nicotine pouches and other nicotine products.

A Council document dated 21 October 2026 (14681/26) outlines transitional tax rates beginning in 2028, ahead of higher minimum duties under the proposed full-rate provisions. The text was circulated for discussion at the Council’s Working Party on Tax Questions on 26 October.

Recent reporting by EU Reporter and Demócrata also highlights efforts by the Irish Presidency to secure an agreement before the end of 2026. However, differences among Member States remain, particularly over how nicotine taxation should reflect the risks associated with different products.

For GINN, the central issue is whether the revised framework can protect young people while maintaining a proportionate distinction between combustible tobacco and non-combustible alternatives.

What the Latest Council Compromise Proposes

The European Commission’s proposed revision of the Tobacco Excise Directive would extend EU-wide minimum excise requirements to nicotine pouches and other nicotine products.

The October Presidency compromise introduces a phased approach to implementation.

Under the draft, minimum excise duties on nicotine pouches and other nicotine products would initially be set at 10% of the retail selling price, including taxes, or €30 per kilogram from 2028 to 2029. These minimums would increase to 25% or €50 per kilogram between 2030 and 2031, before reaching 50% or €80 per kilogram under the full-rate provisions. The applicable duty would need to satisfy the relevant minimum under the directive’s calculation rules.

The transitional arrangements would give Member States and businesses time to adjust. However, the eventual impact would depend on existing national duties, product prices and how the final legislation is implemented.

Earlier reporting suggested that a revised compromise could reduce the estimated minimum duty on nicotine pouches from approximately €1.14 to €0.64 per can. These figures illustrate the scale of the negotiations but should not be interpreted as fixed charges for every product. The October Council text provides a more direct indication of the latest proposed tax structure.

The compromise also specifies that the minimum rates would apply consistently within each product category, regardless of product presentation, origin or other characteristics. This would establish a common baseline while leaving Member States to determine how the requirements interact with their national tax systems.

Ireland Seeks Progress as Sweden Remains a Key Consideration

According to Demócrata, the Irish Presidency is seeking to finalise negotiations in November, with a possible political agreement at the Economic and Financial Affairs Council (ECOFIN) meeting on 9 November.

The latest compromise was circulated ahead of technical discussions on 26 October, reflecting efforts to narrow differences among Member States before the end of the Irish Presidency.

Sweden remains particularly important to the negotiations. Its government has raised concerns about substantial tax increases on nicotine pouches, arguing that taxation should recognise differences between combustible cigarettes and smoke-free nicotine products.

Under EU rules, agreement on harmonised indirect taxation requires unanimity among Member States. Sweden could therefore prevent adoption by voting against the proposal, although an abstention would not, by itself, block agreement.

The outcome will depend on whether the Presidency can secure a compromise acceptable to all Member States.

Why Risk-Proportionate Taxation Matters

Nicotine taxation serves legitimate public-health objectives, including discouraging youth initiation and reducing nicotine dependence. However, the structure of taxation also matters when considering alternatives to combustible cigarettes.

Smoking exposes users to harmful substances produced through combustion. Nicotine pouches avoid combustion, although they remain addictive and evidence concerning their long-term health effects continues to develop.

These differences are relevant when determining whether nicotine products should be subject to comparable tax burdens.

For adults who smoke, the relative affordability of non-combustible alternatives may influence decisions to switch products. Substantial increases in nicotine pouch taxation could affect these incentives, although the extent of any resulting changes in smoking behaviour remains uncertain.

A proportionate framework should therefore consider youth protection alongside the potential role of differentiated taxation in reducing smoking-related harm.

What the Proposed Changes Mean for the Nicotine Pouch Sector

The October compromise provides greater clarity on the rates and transitional periods under discussion, but important questions remain about national implementation.

A common EU minimum duty would not necessarily result in identical retail prices across Member States. Existing national tax arrangements, product characteristics and commercial pricing would continue to influence the final cost to consumers.

For manufacturers and retailers, regulatory certainty will be important. Clear implementation dates, consistent calculation methods and sufficient transition periods would help businesses prepare for any new requirements.

The broader policy consideration is whether the final framework will maintain a meaningful tax distinction between combustible tobacco and non-combustible nicotine products.

What Happens Next?

The Irish Presidency is seeking further progress in November, but the revised Tobacco Excise Directive has not yet been adopted. The proposed rates, transitional arrangements and political agreement remain subject to negotiation.

The latest Council compromise represents an important development by setting out a more detailed timetable for introducing minimum duties on nicotine pouches and other nicotine products.

For GINN, the effectiveness of the revised directive should be assessed against its public-health objectives. Taxation should discourage youth initiation, support regulatory compliance and recognise differences in risk between combustible and non-combustible products.

As negotiations continue, the priority should be a framework that is scientifically informed, proportionate and capable of supporting sustained reductions in smoking-related harm.

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