Illicit tobacco trade in Europe reached a record high in 2024 with significant increases reported in France and the Netherlands, according to a report funded by US tobacco giant Philip Morris International.
The report, which is produced annually by consultancy firm KPMG and commissioned by the American multinational tobacco company, tracks the scale of illicit tobacco trade across the European region.
The 2024 report has been released amid growing tensions among EU member states regarding the revision of the bloc’s tobacco excise tax legislation. France and the Netherlands have led calls for the European Commission to update the legislation and introduce higher, EU-wide taxes on tobacco products.
The report reveals a broad resurgence of the black market for cigarettes, particularly in countries with high tobacco taxes. Overall, it found that 38.9 billion illicit cigarettes were consumed across the EU in 2024, marking a 10.8% increase on the previous year.
France topped the list, with an estimated 38% of all cigarettes consumed being illicit. The Netherlands followed with 18%.
In contrast, countries that firmly oppose high taxation, like Italy and Romania, recorded relatively low illicit consumption rates of 2% and 6%, respectively.
Greece, which has lower excise duties, still recorded a high illicit rate of 18%. However, the report also found that 6.2 billion fewer illegal cigarettes were consumed in Greece in 2024. A tobacco industry source attributed the decline to a stable taxation regime, increased border controls to mitigate migration, and a consumer shift to heated tobacco products, which are currently more difficult to counterfeit.
The report also noted a drop in illicit trade in countries such as Ukraine, where consumption of illegal cigarettes fell to six billion – down 5.7 billion from 2023. An industry source linked this decrease to wartime tax reforms aimed at increasing public revenue.
Recently, 15 EU countries sent a letter to the EU commissioner in charge of taxation, with Dutch Finance Minister Wopke Hoekstra urging him to take action.
The main argument is that higher taxation will make smoking unaffordable and thus encourage people to quit.
According to a Commission source close to the matter who spoke to Euractiv, the rules for tobacco taxation are no longer fit for purpose, and the EU executive is currently considering a proposal to amend them.
However, revising the tobacco legislation is not on the Commission’s work programme for this year, and unanimity among the member states is required.
(de)