At EVO NXT 2026, the Global Institute for Novel Nicotine hosted a deep dive session examining how taxation frameworks and market surveillance systems are shaping the regulation and development of alternative nicotine products across the EU and beyond.
The session was moderated by Ciprian Boboi and featured contributions from Tomasz Płaska, Leonhard Kipphan, and Lorenzo Guaragna, bringing together perspectives from manufacturing, legal analysis, and regulatory technology.
Taxation Frameworks: Between Harmonization and Fragmentation
The discussion highlighted ongoing efforts to revise the EU Tobacco Taxation Directive (TTD), with the objective of introducing minimum excise levels for alternative nicotine products. While this represents a step toward alignment, speakers emphasized that fiscal sovereignty remains with Member States, allowing national governments to set higher tax rates.
As a result, taxation across the EU continues to reflect a fragmented landscape, with differing approaches to product categorization and pricing.
This divergence may contribute to uneven market conditions, particularly where price differentials exist between neighboring jurisdictions.
Risk Alignment and Product Classification
A central question addressed during the session was whether taxation frameworks are evolving toward risk-based differentiation. Speakers noted that, at present, taxation approaches often remain anchored in legacy tobacco models, with limited distinction between combustible and non-combustible products.
While some jurisdictions have introduced differentiated rates, these are frequently calculated in relation to traditional tobacco benchmarks rather than independent product characteristics.
This approach raises questions regarding proportionality and consistency in regulatory treatment.
Market Surveillance and Track-and-Trace Systems
The role of market surveillance, particularly through track-and-trace systems, was also examined. These systems are designed to enhance oversight of legal supply chains and support enforcement efforts against illicit trade.
However, speakers highlighted that track-and-trace mechanisms primarily operate within the legal market and do not directly address actors outside regulated systems.
As such, their effectiveness depends on complementary enforcement measures and coordinated action across jurisdictions.
Illicit Trade and Cross-Border Dynamics
The session identified illicit trade as a key challenge linked to both taxation and regulatory complexity. High tax differentials and inconsistent enforcement across Member States may create incentives for cross-border purchasing and informal supply channels.
Speakers noted that illicit trade dynamics are influenced by a combination of factors, including tax levels, regulatory gaps, and enforcement capacity.
These factors interact to shape both consumer behavior and market outcomes, particularly in regions with significant price disparities.
Compliance Complexity and Industry Impact
From an operational perspective, the evolving regulatory landscape introduces increasing complexity for companies. Compliance requirements related to taxation, reporting, and surveillance systems require significant investment in infrastructure, processes, and expertise.
This may present challenges for smaller operators, particularly where adaptation costs are high and regulatory changes occur rapidly.
Speakers noted that such conditions may influence market structure, including consolidation and shifts in business models.
Policy Design and Unintended Consequences
A recurring theme throughout the discussion was the importance of considering unintended outcomes in policy design. Taxation and regulatory measures are intended to influence behavior, but their effects may vary depending on implementation and market conditions.
Speakers emphasized that policy decisions should account for potential impacts on both legal and informal markets, as well as on public health objectives.
Conclusion
The GINN deep dive at EVO NXT 2026 highlighted the complexity of taxation and market surveillance frameworks for alternative nicotine products. While efforts toward alignment are ongoing, significant variation remains across jurisdictions.
The discussion underscored the need for coordinated policy approaches that consider taxation, enforcement, and market dynamics together, ensuring that regulatory frameworks are both effective and adaptable in a rapidly evolving landscape.
