Germany adopts e-liquids tax as EU decision looms

German vapers will pay more for e-liquids starting next year after lawmakers approved a tax that will apply to both nicotine-containing and non-nicotine e-liquids. the Tobacco Tax Modernization Act was passed by the Bundestag (the lower house of parliament) on June 11 and was approved by the Bundesrat (the upper house, or “federal council”) on June 25.

The government will collect € 0.16 (US $ 0.19) per milliliter as of July 1, 2022. The tax will then increase in stages until 2026, when it will appeal to € 0.32 / mL. For a 10ml bottle of e-liquid (the maximum legal size under current TPD rules) that costs € 5.00, this represents a price increase of around 30% in 2022, rising to 60% four years later.

Since the tax also covers nicotine-free products, vaping retailers will not be able to avoid the tax by selling nicotine-free shortfills and nicotine shots separately. The tax is expected to shut down many vaping stores and increase online sales for out-of-country retailers and sales on the German black market.

Germany has a population of over 83 million and is home to a large and well-established community of “vapers” (vaping translates to the German word moisten: to smoke). The country has two established vape consumer organizations and as of 2019 had more than 1,500 vape shops.

Germany also has a lot of smokers. More … than 22% of Germans over 15 smoke cigarettes. The German tobacco tax bill also increases taxes on cigarettes and will tax heated tobacco products (HTP) like IQOS for the first time, at a rate similar to combustible cigarettes.

Among major European countries, the highest vape tax is currently € 0.30 / ml, the rate in Finland and Portugal. The Danish tax, which will come into effect next year, is equivalent to around € 0.27 / ml. Little Montenegro (620,000 inhabitants) has the highest European tax on e-liquids: 0.90 € / ml.

The European Union is reassessing its harmonized tobacco tax framework, known as the Tobacco Excise Directive, or TED. The European Commission could set a minimum tax rate for vaping products to be adopted by the 27 EU member countries (the harmonized tax rate would be a floor; each country could choose to impose a tax more higher than the minimum imposed by the EU).

It may be a bad sign that Germany, the richest and most populous country in the EU, has imposed an excessive vaping tax while TED talks are underway. Mighty Germany could push for an EU-wide minimum vape tax, which would make it unattractive for German vapers to order products from other countries with lower taxes.

Spanish health authorities are also pushing for a tax on e-liquids.

Aron M. Newman