Efforts to reach agreement on new EU taxes on cigarettes and nicotine products stalled at Monday's ECOFIN meeting in Brussels after Malta refused to support a compromise proposal backed by the other 26 member states.
According to Reuters, the compromise drafted by the Irish Presidency secured support from all member states except Malta. As changes to EU tax legislation require unanimity, no political agreement could be reached.
Irish Finance Minister Simon Harris, who chaired the meeting, welcomed the support of the 26 member states while expressing disappointment at Malta's position. He said he hoped further consultations would make agreement possible in December.
What the proposal contains
The Irish Presidency's proposal would gradually increase minimum excise duties on cigarettes between 2028 and 2032.
According to La Repubblica, the minimum excise duty would rise from the current EU minimum of €90 per 1,000 cigarettes to:
- €140 from July 2028
- €170 in 2030
- €200 in 2032
From 2032, excise duties would also be required to represent at least 60% of the weighted average retail price, subject to certain exemptions.
The proposal does not automatically mean cigarette prices would rise by the same amount, as the impact would depend on each country's existing tax regime and pricing policies.
Cyprus transition period
Of particular interest to Cyprus is a proposed transition period allowing certain member states to delay full compliance with the new minimum tax rates until 1 January 2036.
According to La Repubblica, the provision would apply to:
- Cyprus
- Greece
- Italy
- Bulgaria
- Spain
- Croatia
- Luxembourg
- Portugal
- Romania
- Slovenia
The measure is intended for countries that would otherwise need annual excise tax increases exceeding 2.35% compared with 2025 levels.
However, the transition period remains part of the proposal and has not yet been approved.
New taxes on alternative nicotine products
The proposed reform also extends to newer nicotine and tobacco products.
It introduces minimum tax rates for:
- Electronic cigarette liquids, including nicotine-free products
- Nicotine pouches
- Heated tobacco products
For e-cigarette liquids, the proposal sets an initial minimum rate of 20% of the retail price or €0.20 per millilitre.
Nicotine pouches would face a tax of 10% of the retail price or €30 per kilogram, with gradual increases over time.
The aim is to modernise EU legislation, reduce tax disparities between member states and support public health policies.
Cross-border purchases
The proposal also affects the transport of cigarettes between EU countries for personal use.
According to La Repubblica, the indicative threshold would be reduced from 800 cigarettes to 200 cigarettes.
The threshold would not constitute a strict prohibition but would serve as one factor used by authorities when assessing whether products are intended for personal use or commercial purposes.
Why Malta objected
According to MaltaToday, Maltese Finance Minister Clyde Caruana argued that the proposed minimum tax rates could disproportionately affect Malta and raised concerns about protecting national tax-setting powers.
The Irish Presidency subsequently introduced additional compromises, including a future review of nicotine pouch taxation and the removal of automatic inflation-linked adjustments to minimum tax rates until the next revision of the directive.
Those concessions helped ease concerns raised by Finland, Estonia and previously Sweden, but Malta maintained its opposition.
Cyprus backs proposal
Cyprus was among the 26 countries supporting the compromise.
Following the meeting, the Cyprus Ministry of Finance said Finance Minister Makis Keravnos had backed the latest proposal, describing it as balanced.
The ministry confirmed that despite significant progress, unanimous agreement was not achieved.
The Irish Presidency will continue consultations with Malta ahead of the next regular ECOFIN meeting on 11 December.
Until an agreement is reached, the proposed tax changes remain under negotiation and do not result in any immediate changes to cigarette taxation in Cyprus.
Sources: Reuters, LaPresse, La Repubblica
