The European Union’s plan to overhaul tobacco and nicotine taxation has reached another difficult stage. Although most EU governments have moved closer to supporting a common excise framework, finance ministers failed to reach an agreement at their November 9, 2026 meeting after Malta withheld its approval.
The proposed reform would increase minimum excise duties on traditional tobacco products and introduce EU-wide minimum taxation rules for e-cigarette liquids, heated tobacco and nicotine pouches. The Irish presidency of the Council had secured support from 26 of the 27 member states, but the remaining disagreement was enough to prevent the package from moving forward.
The latest negotiations also brought changes to the nicotine pouch proposal. Instead of settling the precise minimum tax rates immediately, the Irish presidency explored an approach that would first establish nicotine pouches within the EU’s common excise framework, leaving their specific tax levels for later discussions.
For manufacturers, retailers and consumers, the outcome means that the proposed tax changes remain under negotiation. Existing national tax systems continue to apply.
The tax debate is taking place alongside wider changes to European nicotine regulation, as discussed in our report on the EU’s next phase of TPD3 reforms.
Malta Becomes the Final Obstacle to EU Tobacco Tax Agreement
The November 9 Economic and Financial Affairs Council (ECOFIN) meeting represented an important step toward updating the EU’s tobacco taxation rules. According to Irish Finance Minister Simon Harris, 26 member states were prepared to support the compromise package.
Malta, however, was not ready to approve the proposal. Because the relevant EU tax legislation requires unanimous agreement among member states, support from the other 26 governments could not produce a Council general approach.
Maltese Finance Minister Clyde Caruana reportedly raised concerns about the proposed minimum tax levels, automatic adjustments and mechanisms linked to differences in national purchasing power. Malta also wants sufficient flexibility for governments to determine taxation according to their domestic economic conditions.
The disagreement follows several rounds of negotiations in which other countries also raised reservations.
Finland and Estonia had expressed concerns earlier in the discussions but ultimately accepted further concessions from the Irish presidency. Estonia secured a compromise concerning the timing of automatic adjustments to minimum excise rates, while Finland moved into the supporting group.
Sweden had previously been one of the most vocal critics of the proposed nicotine pouch tax burden. Its earlier objections focused on the potential impact of high minimum rates and the principle of adjusting tax requirements according to national purchasing power. However, the revised compromise gained broader support, leaving Malta as the remaining holdout at the November 9 meeting.
Proposed Nicotine Pouch Tax Rates Could Reach €50 per Kilogram
Nicotine pouch taxation has been one of the most sensitive parts of the EU reform.
A compromise document circulated by the Irish presidency on November 5 proposed a gradual increase in minimum excise duties. The proposed schedule was designed to give member states and businesses several years to adapt.
The draft included the following minimum rates:
| Proposed implementation date | Nicotine pouch minimum excise |
|---|---|
| January 1, 2028 | 10% of retail selling price or €30 per kilogram |
| January 1, 2030 | 25% of retail selling price or €40 per kilogram |
| January 1, 2032 | 50% of retail selling price or €50 per kilogram |
These figures are from the November 5 negotiating document. They are not approved tax rates and should not be interpreted as confirmed future charges.
During the November 9 negotiations, the Irish presidency explored separating two questions: whether nicotine pouches should enter the EU’s common excise framework and exactly how much tax should apply to them.
Under this approach, governments could first agree on the inclusion of nicotine pouches, while postponing the decision on specific minimum rates. The proposal was intended to reduce disagreement over the most politically sensitive part of the package.
However, the wider reform still failed to secure unanimous support. No new EU-wide minimum nicotine pouch tax has been adopted.
Italy is another example of how national governments are reconsidering nicotine taxation, as explained in our coverage of Italy’s proposed 2027 vape and heated tobacco tax increases.
E-Cigarettes and Heated Tobacco Also Face a Common Tax Framework
The reform extends beyond nicotine pouches. The European Commission’s wider proposal seeks to modernize the EU’s tobacco excise system and cover products that currently face different national taxation arrangements.
The proposed framework includes:
- E-cigarette liquids: Including qualifying nicotine-containing and nicotine-free e-liquids within the directive’s scope.
- Heated tobacco products: Bringing these products into a more consistent EU excise structure.
- Nicotine pouches: Establishing common EU minimum taxation rules for qualifying tobacco-free oral nicotine products.
- Conventional tobacco: Revising minimum duties on cigarettes, cigars, fine-cut tobacco and other established categories.
- Raw tobacco: Strengthening oversight of movement and trade to help authorities address illicit manufacturing and tax evasion.
At present, member states have different approaches to taxing newer nicotine products. Some apply specific duties based on liquid volume or product weight, while others use different tax structures or rates.
A harmonized minimum framework would reduce some of these differences, although national governments would retain the ability to apply higher domestic taxes within the limits of the adopted legislation.
Traditional tobacco snus and tobacco-free nicotine pouches must also be distinguished. The proposed treatment of modern nicotine pouches does not automatically bring traditional Swedish tobacco snus into the same taxation category.
National Purchasing Power Remains a Sensitive Issue
Another source of disagreement concerns how EU minimum excise duties should account for differences in national purchasing power.
A single nominal tax requirement can have very different economic effects across member states. Countries with lower average incomes or different price levels may face a greater relative burden than wealthier markets.
The Irish presidency’s compromise included mechanisms intended to address these differences. However, some governments have argued that such adjustments could complicate national tax policy and reduce flexibility.
Malta’s objections show that the issue extends beyond the treatment of nicotine pouches. The wider debate concerns how much authority national governments should retain when setting domestic excise duties.
The negotiations also considered periodic adjustments to minimum rates. Estonia had raised concerns about automatic increases, and an additional compromise was introduced to suspend such adjustments until the directive’s next revision.
These provisions demonstrate why reaching agreement on a common European tax framework has become more complicated than simply setting a new minimum rate.
Ten EU Countries Could Receive More Time to Meet Tobacco Tax Requirements
The negotiations also included transitional arrangements for conventional tobacco taxation.
Under another proposed compromise, ten member states could receive additional time to meet certain minimum excise requirements for cigarettes and roll-your-own tobacco. The suggested extension would run until January 1, 2036.
The countries identified in reporting on the compromise include Cyprus, Greece, Italy, Spain, Bulgaria, Croatia, Luxembourg, Portugal, Romania and Slovenia.
The proposed transition would apply to qualifying countries facing particularly large annual increases in order to reach the revised minimum requirements.
Like the nicotine pouch rates, this arrangement remains part of an unapproved negotiating package. It should not be treated as a finalized exemption or a change to current national tax obligations.
What Happens Next for Europe’s Vape and Nicotine Industry?
The failure to reach an agreement on November 9 does not mean the EU has abandoned its tobacco taxation reform.
Irish Finance Minister Simon Harris said the presidency intends to continue working with Malta and pursue an agreement in December. The stated objective is to resolve the remaining disagreement without reopening the entire negotiated package.
The next regular ECOFIN meeting is scheduled for December 11, 2026, although further discussions and political negotiations may take place before then.
The reform involves two related legislative proposals: a revised directive covering the structure and minimum rates of excise duties on tobacco and related products, and amendments to the EU’s general arrangements for excise duties.
The European Parliament has already issued consultative opinions on the proposals. However, the Council still needs to reach the required unanimous agreement under the applicable legislative procedure.
Until that happens, the proposed minimum rates for e-liquids, heated tobacco and nicotine pouches do not become new EU-wide tax obligations.
Conclusion: EU Nicotine Tax Reform Remains Unsettled
The November 9 ECOFIN meeting showed that the EU has made substantial progress toward a common tobacco and nicotine taxation framework, but agreement remains out of reach.
The Irish presidency secured backing from 26 member states, while Malta’s objections prevented the Council from adopting a general approach. The proposed €50/kg or 50% retail-price minimum for nicotine pouches by 2032 remains part of the earlier negotiating text, not an enacted EU tax.
For the vaping, heated tobacco and nicotine pouch industries, the next round of negotiations will be important. A final agreement could reshape excise requirements across the European market, but the precise rates, transition periods and implementation arrangements remain subject to further political decisions.