Scope:

Evaluation of Council Directive 2011/64/EU on the structure and rates of excise duty applied to manufactured tobacco.

Evaluation findings:

Regarding the REFIT objectives of burden reduction and simplification, the evaluation notes that the regulatory burden is not an issue for Member States authorities nor for operators.  Compliance costs are actually mainly related to the Horizontal Directive that oversees all arrangements concerning excise systems and the movement of excise goods overall (Council Directive 2008/118/EC). There remain however legal uncertainties that would need to be addressed. Mainly this regards lack of the tax regulatory framework for new products (heated tobacco products and e-liquids for electronic cigarettes), which appeared in the EU market recently, and the lack of harmonised definition and proper control system for raw tobacco.

Estimated savings and benefits

On the market side, the evaluation noted that the recent developments have accelerated within new e-cigarettes, heated tobacco products and a new generation of modern products is coming into the market. In particular, the current scope of the Directive is not capable of providing for an explicit harmonised taxation regime for e-cigarettes and heated tobacco products. As a result, Member States have established some taxation on these products but with different structures. The current lack of harmonisation of the tax regulatory framework for these products is also restricting the possibility to monitor their market development and control their movements and cause administrative issues in the cross-border movements with different views on new products. As regards raw tobacco, the evaluation confirmed that the lack of control of the supply chain for raw tobacco and the risk of fiscal evasion due to the growing illicit production of cigarettes within the EU remains a constant problem.