Report from the Commission to the Council on the REFIT evaluation of Directive 2011/64/EU and on the structure and rates of excise duty applied to manufactured tobacco

Directive 2011/64/EU sets out EU rules on the structure and rates of excise duty applied to manufactured tobacco. In particular, it defines and classifies various manufactured tobacco products covered by the Directive according to their characteristics. The structure of the excise duties for the different types of products is also established in this Directive.

The Directive aims to ensure both the proper functioning of the internal market and, at the same time, a high level of health protection. A proper functioning internal market presupposes that the way in which Member States tax the consumption of products in this sector neither distorts competition nor impedes their free movement within the EU.

In this context, the Directive should ensure that manufactured tobacco products are correctly taxed in the Member State of final consumption. This is important, given that receipts from excise duties on manufactured tobacco contributed overall more than €81 billion to the national budgets of Member States in 2014.

The Commission is required to submit a report on the rates and structure of excise duty laid down in this Directive every four years. This report must take into account the proper functioning of the internal market, the real value of the rates of excise duty and the wider objectives of the Treaty and must be based in particular on the information provided by Member States. Furthermore, the Directive has been identified for evaluation under the Commission's Regulatory Fitness and Performance Programme (REFIT).

The current report presents the results and conclusions of an external evaluation assessing the Directive from these two angles. In addition, it provides the overview of the available statistics reported by Member States concerning the development of the Weighted Average Price (WAP), releases for consumption, tax receipts and tax burden on manufactured tobacco since the Directive entered into force in 2011.

Unlike previous reports, the current report does not focus on increases in the minimum rates of excise duty prescribed by Directive 2011/64/EU. Many increases in the minimum overall excise duty have only entered into force recently; some Member States have been granted transitional periods and some gradual increases must still take effect. The impact of these measures will, therefore, be examined in a future report.

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