Budget Law

Tobacco, the Tax Calendar remains, but the shadow of EU reform on revenues

Logista-Fondazione Tor Vergata report presented: record revenues at 15.2 billion, Brussels maintains different taxes between traditional and innovative products

by Ernesto Diffidenti

18 September 2025

4' min read

Key points

Italy leads the way on taxation of smoking products
Multinationals from Brussels illogical proposals
The case of cigars: tax rate rises by 1,091%

4' min read

Tax revenues generated by the tobacco sector continue to grow, reaching a record level of €15.2 billion in 2024, of which €11.4 billion in excise duties and €3.8 billion in VAT. But there is also growing concern about the new European rules, which, with the aim of standardising taxation, announce themselves as a new fiscal squeeze. With the difference, however, that the increased revenue would end up directly in the coffers of Brussels. The supply chain, which met at the presentation of the 'Report on the Distribution of Smoking and Non-Smoking Products 2025', produced by Logista in collaboration with the Tor Vergata Foundation, immediately put its hands out: "It will be fundamental to adopt a balanced approach that ensures the pursuit of the various objectives without giving in to ideological and instrumental drifts".

Italy leads the way on taxation of smoking products

The tax calendar for the tobacco sector is drawing to a close,' emphasises Maurizio Leo, Deputy Minister for the Economy and Finance, 'and, with the next Budget Law, we are awaiting the definition of a new multiannual structure. It will be a crucial step that we will tackle with a spirit of listening and attention to the needs of a strategic sector for the country where tax planning represents a virtuous example in Europe'. Undersecretary for the Economy, Federico Freni, adds: "Taxation on tobacco products will continue to rise, but in a sensible, progressive manner and without demagogy". In this direction, 'the tax calendar will remain and continue to be an element of certainty, indicating today what will be paid tomorrow'. For Freni, it is the stability of the rules that guarantees the revenue, which in tobacco rises to 22 billion with the induced taxation. Italy has not been taken aback by the tightening of rates proposed by the EU "but it is wrong to assume that some people want to raise taxes to defeat smuggling. The numbers say that this is not the case'.

Hence the importance of bringing the Italian model to the negotiating table, which is more virtuous than the French and Spanish models, but also the Dutch model, where illegal products account for 44% of smoking products. "Italy, with the legislation introduced in 2015 that clearly differentiates between traditional and innovative products," recalls the Minister for Enterprise and Made in Italy, Adolfo Urso, "is at the forefront in Europe. Our aim is to continue to promote a balanced regulatory framework that equally considers health, economy and innovation also in the forthcoming interventions for the regulation and taxation of tobacco products in the EU'.

For the Minister for European Affairs, Cohesion Policies and the NRP, Tommaso Foti, therefore, "there must remain at EU level a fiscal and regulatory differentiation between smoking and innovative products, also referring in this case to heated tobacco and electronic cigarettes". The decision-making process towards this goal "must involve all states and, at the same time, guarantee flexibility of application by the individual states, also because of the operational and regulatory autonomy that we think we can claim".

Multinationals from Brussels illogical proposals

Progressiveness and balance are the key words used by the tobacco multinationals. "We do not understand the logic of the European proposals - explains Pasquale Frega, president and managing director of Philip Morris Italia -. Our country has shown that a clear, proportionate and differentiated regulatory and fiscal framework guarantees stability, encourages constant revenue growth, stimulates investment and generates employment. With the start of a new season of reforms at European and international level, there is a risk of adopting ideological and restrictive approaches that would take us back decades. Italy's role is essential to contribute to the definition of international policies that recognise the value of innovation, strengthening the competitiveness of strategic supply chains of excellence such as the national one: an ecosystem of 8,000 companies, which employs about 44,000 people and exports about EUR 2 billion every year to Europe and the world'.

'We consider Italy a model for Europe,' emphasises Fabio de Petris, president and CEO of BAT Italia, 'a balanced regulatory and fiscal framework facilitates foreign investment and favours predictable revenues for the state, also thanks to the control of the illicit market. This is complemented by an authorised resale system and efficient distribution through tax warehouses managed by Logista'. "We strongly believe in the importance of a transparent collaboration with all institutions," adds Jacob Wahnon Bunan, Country Manager of Imperial Brands Italy, "aimed at building a stable and sustainable future for the market of tobacco products and new generation in Italy, always starting by listening to the requests and desires of consumers.

The case of cigars: tax rate increases by 1,091%

And then there is the case of cigars. "Europe," says Stefano Mariotti, managing director of Manifatture Sigaro Toscano, "wants to increase rates by 1.091%, a measure that has no impact either on health given that cigars account for 0.19% of consumption, or economically given that the revenue would be 30 million out of a total estimated revenue increase of 11 billion".

"We hope that the forthcoming tax interventions will maintain a balanced and non-ideological approach that, in addition to protecting consumers, is capable of maintaining the sustainability of the sector and preserving tax revenues," concludes Federico Rella, vice-president and director of Corporate Affairs at Logista Italia, which moves over 80 million kilos and, with 90 depots, reaches 60,000 tobacconists in all municipalities of Italy.