New fees on liquid products could hit Italy’s entire vaping supply chain – and a retroactive application of the fees, coupled with a short due date for payment, could cripple companies if no resolution is found.
A decree approved in March by the Ministry of Health jointly with the Ministry of Economy and Finance and published in Italy’s Official Gazette on 30th May will apply a fee of €327.85 to manufacturers on all vaping products. Every substantial modification thereafter is subject to a further fee of €108.23.
Manufacturers are required to pay the notification fee for every product registered with the Ministry of Health before it is put on the market. So, for instance, if a manufacturer has placed five e-liquids on the market, each with five different nicotine concentrations, they must pay €8,196.25 just to keep them on the shelves.
The decree also requires manufacturers to pay the same fee for every product brought onto the Italian market since 20th November 2016 and to pay that total by the end of next month.
If manufacturers fail to make the payment, they could face repossession or financial penalties.
Manufacturers will also have to pay a one-off fee of €293.53 to cover the costs of data management regarding sales volume, information on the preferences of different groups of consumers, the way the products are sold, and summaries of any market surveys.
Repercussions for retailers
The decree does not affect retailers and consumers directly. But it could have indirect repercussions for retailers, according to Giuseppe Fortunato, communications manager at Svapo Web, a franchise retailer with more than 200 stores in Italy, as well as editor-in-chief of Svapo Magazine and the SkyVape website.
He told ECigIntelligence that manufacturers could withdraw certain products from circulation if they consider the cost of fees to cover all their product lines to be too high.
“In this case, manufacturers have to notify retailers to remove the products chosen to be withdrawn from circulation because they would become unlawful products,” he said.
This would exempt manufacturers from having to pay the notification fees, but at the same time lower potential revenue and limit consumer choice.
Alternatively, manufacturers might opt to cover the cost of fees by raising wholesale prices.
Action possible against retroactive fees
But what most concerns the vaping sector is the lack of communication or consultation between the ministries and the vaping business operators.
Svapo Web’s founder Arcangelo Bove, who is also president of the National Union of Svapo Web’s associates, Unasweb, told Svapo Magazine that the decree was the umpteenth attack on Italian vaping revenues.
“This time, the matter is even more bewildering since everything has been developed in absolute silence. From one evening to the next morning, we literally found ourselves with a new inappropriate tax on our hands,” he said.
According to Giuseppe Izzo, lawyer, lecturer and expert in administrative law, the decree could be contested but this would be limited to the clause making fees retroactive.
He said manufacturers could appeal to the Lazio Regional Administrative Tribunal (TAR) to try to avoid the payment of retroactive fees.
– Dario Sabaghi ECigIntelligence contributing writer
Photo: Notizie Catania