The German Bundestag is set to hold the first reading of the “Amendment to the Tobacco Tax Act” on September 24. The government plans to raise tax rates on products such as cigarettes, heated tobacco, e-liquids, and fine-cut tobacco annually for four consecutive years from 2027 to 2030; projected additional tax revenue is €756 million in 2027, rising to €3.589 billion annually by 2030. Ahead of the parliamentary review, the German Association of the Tobacco and Novel Products Industry (BVTE) launched the “Tabaksteuer mit Augenmaß” (Tobacco Tax with a Sense of Proportion) initiative—supported by BAT, JTI, Philip Morris, Reemtsma, and wholesale/retail associations—advocating for smaller tax hikes and wider tax rate differentials between different product categories.
Key Summary
The German Bundestag is scheduled to hold the first reading of the “Amendment to the Tobacco Tax Act” on September 24, after which it is expected to be referred to the Finance Committee for review.
The government plans to implement tax increases every January 1st from 2027 to 2030; by 2030. The average tax burden is projected to rise to 28.77 euro cents per cigarette, 23.12 euro cents per unit of heated tobacco, and €0.36 per milliliter of e-liquid.
The German government projects that the tax reform will generate an additional €756 million in revenue in 2027, with annual additional revenue reaching €3.589 billion by 2030.
BVTE has launched an industry initiative supported by BAT, JTI, Philip Morris, and Reemtsma; meanwhile, cash receipts from German tobacco taxes fell by 10.8% year-on-year during the first eight months of 2026.
Germany’s Bundestag Begins Review of Tobacco Tax Reform
September 23, 2026. According to the agenda published by the German Bundestag. The parliament will conduct the first reading of the government-proposed “Amendment to the Tobacco Tax Act” (Tabaksteueränderungsgesetz) on September 24.
The bill outlines plans to increase tax rates on cigarettes, heated tobacco, e-liquids, and other tobacco products annually for four consecutive years, from 2027 to 2030.
On September 21, ahead of parliamentary deliberations. The German Association of the Tobacco Industry and Novel Products (BVTE) launched the “Tabaksteuer mit Augenmaß” (meaning “Prudent Tobacco Tax”) initiative, calling for adjustments to the government’s proposed tax hike trajectory.
The initiative is supported by British American Tobacco (BAT) Germany. JT International Germany (JTI Germany), Philip Morris Germany, Reemtsma (part of Imperial Brands), and associations representing German tobacco wholesalers, vending machine operators, and retailers.
Germany Plans Four Consecutive Tobacco Tax Increases From 2027 to 2030
The German Federal Cabinet approved the draft amendment to the Tobacco Tax Act on July 6.
According to the Federal Ministry of Finance’s plan, tax rates for major tobacco and nicotine products will be raised annually starting January 1, 2027, and continuing through 2030.
The key changes in tax burdens are as follows:
| Product Category | Current Level | 2027 | 2028 | 2029 | 2030 |
|---|---|---|---|---|---|
| Cigarettes | 20.27 euro cents/stick | 22.21 cents | 24.21 cents | 26.39 cents | 28.77 cents |
| Heated tobacco | 16.65 euro cents/stick | 18.15 cents | 19.67 cents | 21.32 cents | 23.12 cents |
| E-cigarette liquids & other tobacco substitutes | €0.32/ml | €0.33 | €0.34 | €0.35 | €0.36/ml |
| Fine-cut tobacco | €100.76/kg | €118.90 | €140.99 | €172.40 | €210.51/kg |
Under German tax law, “tobacco substitutes” (Substitute für Tabakwaren) include products such as e-cigarette liquids.
E-Cigarette Liquid Tax Would Rise to €0.36 per Milliliter by 2030
There are significant differences in the nominal rate increases across the various product categories.
Between 2026 and 2030, the tax rate on e-liquids will rise by a cumulative total of approximately 12.5%; the average tax burden on cigarettes will increase by about 42%, and on heated tobacco products by about 39%, while the tax rate on fine-cut tobacco will more than double.
German Government Projects €3.589 Billion in Additional Annual Tax Revenue by 2030
The bill submitted by the German government to the Bundestag projects that this round of tax reforms will generate an additional €756 million in tobacco tax revenue in 2027.
As tax rates rise incrementally over the years, the additional annual tax revenue is expected to reach €3.589 billion by 2030.
The government states that the tax reform serves a dual purpose: consolidating the federal budget and advancing public health goals, such as reducing smoking rates among both young people and adults.
Proposed Cigarette Price Increases Through 2030
Based on price projections by the Ministry of Finance, if manufacturers and importers pass the tax burden changes on to end-consumer prices. The average price of a pack of 20 cigarettes could rise from the current level of approximately €8.05 to:
- approximately €8.77 in 2027;
- approximately €9.56 in 2028;
- approximately €10.42 in 2029;
- approximately €11.36 in 2030.
Actual retail prices remain at the discretion of manufacturers and importers.
BAT, JTI, PMI and Reemtsma Support BVTE Tax Initiative
On September 21, the BVTE launched the “Tabaksteuer mit Augenmaß” (Tobacco Tax with a Sense of Proportion) initiative, calling on the government to moderate the tax hikes and ensure predictability in tax rate policy.
The initiative focuses on issues such as fiscal revenue, the illicit market, and consumer affordability. The legal retail system and tax rate disparities across different product categories.
JTI Germany subsequently publicly supported the initiative via its official LinkedIn account, highlighting concerns regarding the potential impact of planned tax hikes on legal trade, cross-border purchases, and the illicit market.
The BVTE stated that a higher tax burden could drive consumers toward foreign or illicit supply channels and reduce sales volumes for Germany’s legal wholesale and retail sectors.
Lobbying registrations with the German Bundestag indicate that BAT, JTI Germany, Philip Morris, Reemtsma, and BVTE have engaged in policy discussions regarding the current revision of the Tobacco Tax Act.
Their requests include limiting tax rate increases between 2027 and 2030, adjusting tax burdens across different product categories, and incorporating tobacco-free nicotine pouches into the taxation framework.
BVTE Calls for Wider Tax Differences Between Product Categories
The government’s draft proposal already establishes distinct tax rate levels and rates of increase for different product categories.
For instance, the tax on e-liquid is set to rise from the current €0.32 per milliliter to €0.36 by 2030—a smaller increase than that applied to cigarettes and heated tobacco products.
BVTE advocates for widening this gap further and establishing a more pronounced tax gradient based on the specific characteristics and risk profiles of different product categories.
Industry Pushes for Regulation and Taxation of Nicotine Pouches
The industry is also calling for the inclusion of tobacco-free nicotine pouches in Germany’s formal regulatory and taxation framework.
BVTE states that there are approximately 1.5 million nicotine pouch users in Germany, and 20 of the 27 EU member states have already implemented regulatory systems for these products.
The association estimates that a legal, taxed market for nicotine pouches in Germany could generate annual tax revenues of approximately €400 million to €500 million.
These figures regarding user numbers and potential tax revenue are based on BVTE estimates rather than German government projections.
German Tobacco Tax Revenue Falls 10.8% in First Eight Months of 2026
Fiscal data released by the German Ministry of Finance in September show that cash revenue from tobacco taxes totaled €9.789 billion from January to August 2026, down 10.8% from the €10.975 billion recorded during the same period in 2025.
Tobacco tax revenue for the month of August alone stood at €1.247 billion, a year-on-year decline of 5.4%.
Germany’s budgeted tobacco tax revenue target for the full year of 2026 is €16.89 billion.
Tax-Paid Cigarette Volumes Also Decline in Germany
BVTE also reported that the volume of tax-paid cigarettes in Germany during the first eight months of 2026 was approximately 40.6 billion sticks, a 12.6% decrease from the 46.5 billion sticks sold during the same period the previous year.
The industry cites the decline in legal sales volumes and tax revenues as grounds for opposing further significant tax hikes.
Data released by the Ministry of Finance does not attribute the drop in revenue to any single cause.
First Bundestag Reading Scheduled for September 24
The German Bundestag has placed the bill on the agenda for September 24.
According to the parliamentary schedule, following the first reading, the bill is expected to be referred to the relevant committees for further deliberation, with the Finance Committee serving as the lead committee.
If the bill is ultimately approved, the first phase of the new tax rates will take effect on January 1, 2027.
German Tax Reform Connects With Wider EU Tobacco Excise Review
Germany’s domestic tax reform is proceeding in tandem with tobacco excise duty reforms at the EU level.
The European Commission is set to propose revisions to the Tobacco Excise Directive in July 2025, aiming to more systematically incorporate products such as e-liquids, heated tobacco, and nicotine pouches into the EU’s minimum excise duty framework.
The German Ministry of Finance stated that the domestic tax reform would also provide a foundation for negotiations at the EU level; should the revised EU directive ultimately be adopted, Germany’s relevant tax rates and laws may undergo further adjustments in the future.
