2025 Excise Tax on Nicotine Products in Europe

The European nicotine market is preparing for significant changes as various EU member states implement updated excise tax regulations on nicotine products, including e-liquids, nicotine pouches, and heated tobacco products.

These adjustments will have a direct impact on businesses, and this article will help manufacturers and stakeholders understand how to navigate these changes to remain compliant and competitive. From adapting product formulations to optimizing pricing strategies, this guide provides the insights you need to adjust your business operations and make the most of upcoming regulatory shifts.

Excise duty (commonly known as excise tax) is an indirect tax typically levied on manufacturers or suppliers, who then pass the cost onto consumers.

What is more, the excise tax is not universal, it applies only to selected groups of products. Moreover, if a group of products is subject to excise duty at the European Union level, then we are talking about harmonized excise goods. These include:

• energy products
• electricity
• alcohol drinks
• tobacco products

States may additionally tax excise goods other than those listed above. An example is Belarus, which imposed excise duty on goods such as shoes, or Poland, where excise duty applies to cars.

Excise goods regulated by the European Union become the so-called harmonized products. 

Whether a given product is harmonized is decided jointly by the Member States of the European Union. If a product receives this status, it means that it is now subject to the EU’s common excise duty system and a set of European regulations.

Harmonization applies to all economic activity related to a given product. Not only manufacturing, but also trading, distribution, and storage.

Each excise good (including raw materials – nicotine bases used in the manufacturing processes) should be manufactured in a tax warehouse, and its movement should take place between tax warehouses with appropriate security.

Raw materials for e-liquid manufacturing that are subject to excise duty are:

• nicotine base
• nicotine salt base
• hybrid base (nicotine + nicotine salt)
• PG/VG base

Retail e-liquid products that are subject to excise duty are:

• nicotine e-liquids
• nicotine salt e-liquids
• hybrid e-liquids
• nicotine-free shortfills

The current excise situation of the European e-liquids market is very dynamic. Almost every month, there are news and announcements of changes regarding excise duty in various countries.

The European Commission has pushed for a unified framework that updates excise taxes on tobacco alternatives, including e-liquids, nicotine pouches, and heated tobacco products. While cigarettes and other traditional tobacco products have long been subject to high taxes, nicotine alternatives were not uniformly taxed across Europe. In 2025, that’s set to change.

Countries such as Germany, Czechia, and Italy are introducing or adjusting excise duties for these products, while others, like Poland and Latvia, are updating their existing structures to reflect new EU directives. These changes are motivated by the need to reduce the consumption of various products, ensure fair competition across borders, and increase tax revenues.

In December 2024, 16 European Union countries, led by the Netherlands, called on the European Commission to update its 2011 tobacco taxation law to include new products like e-cigarettes (vapes). Currently, there are no EU-wide regulations for vaping products, which has led to a fragmented approach across member states, distorting the EU’s single market.

The existing law is outdated and unable to address the rise of new tobacco products. Each country has adopted its own set of rules, leading to varying levels of excise tax and inconsistent regulations. For instance, France bans the sale of vapes to people under 18 and restricts their use in certain public spaces, while Italy allows public use but forbids vaping near schools. Such inconsistencies might create confusion and an uneven playing field for manufacturers and consumers alike.

The update to the EU tobacco taxation law, initially scheduled for 2022, has been delayed, leading to continued discussions on reform. With disposable vapes gaining popularity, environmental concerns are also rising. These products, often single-use, contribute significantly to electronic waste and pose challenges for proper recycling due to their mix of materials like plastic, metal, and batteries. As the consumption of disposable vapes increases, many countries are considering potential bans or stricter regulations to address both their environmental impact and the health risks associated with their widespread use.

Although the EU aims for more consistency in excise tax rates, each nation is adapting its tax rates and regulations based on local health and economic priorities. Below is a summary of the key upcoming changes in several countries:

In March 2025, Poland raised excise duties on e-liquids by 75%, increasing the rate to PLN 0.96 (€0.21) per milliliter, followed by a further hike to PLN 1.44 (€0.32) in 2026. This applies to both nicotine-containing and nicotine-free liquids. Additionally, heated tobacco products will see incremental excise increases, with a 50% rise in 2025, a 20% increase in 2026, and a 15% increase in 2027. These changes position Poland among the countries with the highest taxes on such products and aim to reduce consumption, particularly among minors.

Germany‘s current excise duty on e-liquids as of 2025 is €0.26 per ml. The tax will continue increasing annually, reaching €0.32 per ml by 2026. This tax applies uniformly to both nicotine-containing and nicotine-free liquids. Germany’s strict taxation policies place it among the most heavily taxed vape markets in Europe.

Czech Republic implemented an excise tax on e-liquids starting in January 2024. The tax follows a phased schedule, increasing from CZK 2.50 (€0.10) per ml in 2024 to CZK 10 (€0.41) per ml by 2027. This progressive increase aims to align the country’s excise tax structure with other EU nations.

As of January 2025, Italy has implemented an increase in excise duty on nicotine liquids, following a gradual adjustment outlined in the budget law. The discount compared to tobacco excise dropped from 15% to 16%, leading to a price increase of approximately €0.11 per 10ml bottle. In 2026, the tax will rise again to 17%, adding another €0.12 per bottle. Nicotine-free liquids and flavorings will also be affected, with taxes reaching about €0.90 per 10ml in 2025 and €1 in 2026.

As of January 1, 2025, Latvia has raised the excise duty on e-cigarette liquids and their components to €0.29 per milliliter, marking the next step in a series of planned tax increases. The excise duty will continue to rise in the coming years, reaching €0.35 per milliliter on January 1, 2026, and €0.39 per milliliter on January 1, 2027. This follows the previous increase on March 1, 2024, when the rate was set at €0.24 per milliliter. The country also tightened regulations on additives like menthol and implementing stricter concentration limits for nicotine pouches.

If your supply chain is international and you purchase goods in countries with excise duty, you need to know that each excise product should be manufactured in a tax warehouse, and its transportation should take place between tax warehouses with adequate financial security.

If your supplier is based in a country where excise duty applies and does not have a tax warehouse, this means that…

• They work against the law
• You are purchasing an illegal product and this may result in legal consequences
• The security and continuity of your orders are at risk – the shipment of your order may be suspended

Even if there is no excise duty in your country, you may be asked to testify as a witness in penal and fiscal proceedings.

Why is it important?

Since January 2023, we have been observing increased excise duty inspections on the Polish vape market. More and more companies turn to us for help in matters related to excise duty because they want to be sure that their supply chain is formally and legally secured.

The 2025 changes will require manufacturers to adopt a more flexible, market-specific approach to production, pricing, and distribution. Here are key strategies to consider:

Countries will have varying excise rates based on nicotine content, so manufacturers should consider offering products with different nicotine strengths to match tax requirements in each market. For example, producing lower-nicotine or nicotine-free versions could reduce excise costs in certain jurisdictions.

Excise tax increases will inevitably affect product pricing. Manufacturers need to carefully evaluate how much of the tax burden can be passed on to consumers without losing market share. Working with retailers to set competitive yet profitable price points will be essential. Historical data indicates that previous tax hikes often led to reduced sales; understanding consumer price sensitivity will be critical.

As excise taxes can differ significantly from one country to another, optimizing production and logistics for specific markets could reduce costs. Manufacturers may consider establishing strategic production facilities and warehouses in countries with favorable excise regimes, so the businesses can mitigate the impact of cross-border distribution costs.

For instance, Chemnovatic operates an excise tax warehouse that allows us to store, manage, and distribute products under tax suspension, ensuring compliance with various national regulations. This structure helps avoid upfront excise payments until the products are released into the market, offering significant benefits.

Additionally, banderole management – the process of labeling products with tax stamps – can be complex and vary widely across EU member states. Chemnovatic’s infrastructure is designed to handle this efficiently, ensuring that products meet all legal requirements.

We offer services that streamline this process, from warehousing to logistics, with in-house experts who understand the ever-changing tax landscape. This integrated approach allows manufacturers to not only lower overall costs but also maintain compliance, improving competitiveness across different European markets.

The complexity of excise reporting across multiple countries can be daunting, but with the right systems and expert guidance, businesses can ensure timely and accurate compliance.

Chemnovatic provides a full suite of excise tax services through its ExTRA (Excise Tax Ready Solutions), designed to help manufacturers navigate these changes seamlessly. Operating from Poland – where excise duty has been enforced for a few years now – Chemnovatic has the largest excise tax warehouse in Central Europe, equipped to manage all aspects of excise tax, from manufacturing to tax stamp labeling.

Chemnovatic’s ExTRA service covers everything from consultations on country-specific excise regulations to handling the entire reporting process for clients. This includes tax stamp labeling, ensuring your products are compliant with Polish and EU laws.

In Poland, the excise tax on vape products has been in force since October 1, 2020. From that day on, to legally produce products such as e-liquids or nicotine bases, a tax warehouse or prepayment of excise duty is required.

Given these two possibilities, before we answer the question of how to operate in the vape industry legally, let’s clarify these two issues.

Prepayment of excise duty is an option to pay excise duty when the manufacturer does not have a tax warehouse. It requires many formal activities and recording of the creation process.

Tax prepayment consists of paying the tax before the manufacturing of products, adequate to the rate of excise duty that must be paid for a certain number of goods manufactured. For example, if a manufacturer wants to make 100 units of e-liquid, they must first pay excise duty on that number of products, before they can legally produce them.

For many companies, prepayment of excise duty is an unattainable solution, because the more goods one needs to produce, the more prepayment must be made by the manufacturer. What does this mean in practice? Freezing large sums of money and disrupting the company’s financial liquidity.

A tax warehouse is an area approved by the state administration where one can legally manufacture excise goods, store excise goods, and move them between tax warehouses – following the law while meeting all quality and technical requirements imposed by state authorities.

If the manufacturer of vape products has their tax warehouse, they can produce excise goods themselves without the need to make a prepayment. Let us state, however, that the sum of the values of the products produced and stored in one day cannot exceed the financial guarantee that the tax warehouse is covered with.

Chemnovatic was the first company in the vape industry in Poland which has set up its tax warehouse at its headquarters, with a total security guarantee of several dozen million PLN. Thanks to that, we have been continuously operating by the law, in a suspended excise duty, since 1 October 2020.

What are the differences in the transport of an excise product to a country with an applicable excise duty and to a country where this excise duty does not apply? The movement of the product is the same, although there are slight nuances.

Sales of excise goods from a country with excise duty:

• Sales to countries where the excise duty is in force – in this situation, after shipping, the customer signs the receipt document and thus releases the manufacturer’s financial security in the form of suspended excise duty in his country. From now on, the customer is responsible for the excise tax on the purchased goods – following the requirements imposed by his country. Check the list of excise duty countries here.
• Sales to countries where the excise duty does not apply – in this situation, after the delivery of the goods, the customer also signs the receipt document and thus releases the manufacturer from the security in the form of suspended excise duty. The difference is that there is no excise tax in the customer’s country, so they no longer have any legal and financial obligations concerning the goods received.

When you choose to purchase from Chemnovatic, rest assured that you are engaging with a fully compliant manufacturer possessing all requisite licenses, infrastructure, and a seasoned team with extensive experience in excise duty matters.

Our expert specialists boast a profound understanding of e-liquid and raw material trade within the European Union. Moreover, they have successfully obtained numerous individual tax interpretations and emerged victorious in the majority of legal disputes, facilitating the legal circulation of excisable goods within the Polish vape industry.

By collaborating with Chemnovatic, you mitigate financial and legal risks, ensuring the acquisition of a premium-quality, legally compliant product.

If you have any questions, please contact us at sales@chemnovatic.com.

As the regulatory landscape around nicotine products evolves, manufacturers must be proactive in adapting their strategies to meet the upcoming excise tax changes. From optimizing product formulations and pricing strategies to ensuring compliance with new regulations, these adjustments are critical for maintaining competitiveness in the changing market.

Ensure your business stays ahead of regulatory changes! Get in touch with our excise tax experts today for tailored compliance solutions.