Cigarette Taxes in Europe

King James I, King of England and Ireland, imposed the first levy on tobacco in 1604, an import tax of 6 shillings 10 pence to the pound. Today, Ireland and the United Kingdom levy the highest excise duties on cigarettes in the European Union (EU), at €7.57 (US $8.93) and €6.57 ($7.75) per 20-cigarette pack, respectively. This compares to an EU average of €3.09 ($3.64). In contrast, Bulgaria (€1.76 or $2.07) and Hungary (€1.96 or $2.31) levy the lowest excise duties.

To ensure the functioning of its internal market, the EU sets a minimum excise duty on cigarettes. It consists of a specific component and an ad valorem component, resulting in a minimum overall excise duty of €1.80 ($2.12) per 20-cigarette pack and 60 percent of an EU country’s weighted average retail selling price (certain exceptions apply). On top of excise duties, all EU countries levy a value-added tax (VAT) on cigarettes.

Taking into account both excise duties and VAT, the average share of taxes paid on a 20-pack of cigarettes ranges from 91.6 percent in the United Kingdom to 69.3 percent in Luxembourg (as a percent of the weighted average retail sales price).