Germany proposes new €0.02 per mg tax on nicotine e-liquids from 2022

The German government is proposing a new tax scheme for nicotine-containing vaping products to come into force in summer 2022 as “a response to current market developments”.

The Ministry of Finance plans to introduce a tax of €0.02 per mg of nicotine on e-liquids from 1st July next year. The rate would then be doubled to €0.04 per mg from 1st January 2024 to the end of 2026.

“This is appropriate for reasons of fair taxation since only nicotine-containing substances in e-cigarettes are to be regarded as substitutes for cigarettes,” reads the draft of the proposed Tobacco Tax Modernisation Act (Tabaksteuermodernisierungsgesetz, TabStMoG).

The tax authorities also justify the decision by the “existing risk potential” of vaping products in comparison with traditional tobacco.

“They are not harmless consumer products and can cause serious illnesses,” the draft bill states, in reference to a recent review carried out by the German Cancer Research Center (DKFZ).


Projected tax revenues


E-cigarettes are not specially taxed in Germany at present, but are subject only to 19% value-added tax (VAT).

The government estimates that the new vaping tax will bring in up to €135m in 2022. Officials forecast that it will raise up to €2.9bn for the public coffers by 2026.

The government assumes the tax will result in higher prices for vaping products: “Further costs for citizens could result from the price rise as a result of the tobacco tax model.”

However, the German Alliance for Tobacco-free Pleasure (BfTG) says the plan “makes no sense”.

“The tax would make smoking cheaper than vaping and make e-liquids many times more expensive,” BfTG chairman Dustin Dahlmann told ECigIntelligence.

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    Dahlmann warned about examples in other countries, such as Italy and Estonia, where a black market in vapour products is flourishing and the legal industry is collapsing due to “disproportionate e-cigarette tax”.


    Leave it to the EU


    The BfTG believes the whole issue of taxation should be left at the EU level, where the European Commission is already working on a new harmonised tax scheme for tobacco and e-cigarettes. “Unilateral national initiatives endanger the EU strategy,” Dahlmann said.

    The Commission is expected to decide by the end of 2021 on introducing a new harmonised tax scheme for tobacco-alternative products.

    The German Professional Association of Pediatricians (BVKJ), however, welcomed the German proposal.

    “The new cigarette alternatives are becoming more expensive due to the equal tax treatment. This makes them less attractive, especially for young people,” BVKJ president Thomas Fischbach said.

    He expects the tax increase to have a “steering effect“ on the consumption of e-cigarettes similar to the effect of the tax on alcopops that reduced the popularity of the sweet pre-mixed alcoholic drinks among German youth.


    What This Means: The federal government in Berlin belives e-cigarettes are “becoming increasingly significant” on the German market and that further tax action is needed.

    ECigIntelligence has learned that the proposal is currently being discussed by the various ministries involved and that the Cabinet of Ministers will approve a final version of the bill, which will then be put to the Bundestag for a final vote.

    Alexander Welscher ECigIntelligence contributing writer

    Photo: Public domain

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    This article was written by one of ECigIntelligence’s international correspondents. We currently employ more than 40 reporters around the world to cover individual vaping markets. For a full list, please see our Who We Are page.

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