EU States, Including Estonia, Push for Tighter Cross-Border Tobacco and Alcohol Limits

Introduction: A Push for Stricter Controls

A coalition of European Union member states, including Estonia, is proposing significant amendments to existing legislation to introduce new limits on cross-border tobacco and alcohol imports. This initiative is primarily driven by a desire to curb illicit trade, safeguard public health, and prevent substantial revenue losses experienced by national governments. The discussions took place during an early-December meeting focused on the revision of the Tobacco Taxation Directive (TED).

Member States Advocate for Change

Denmark, currently holding the EU's Council presidency, tabled a proposal at the December meeting, suggesting a combination of milder tobacco taxation and stricter limits on intra-EU tobacco imports, which are regulated under Article 32 of the Excise Duty Directive. This Danish initiative specifically targets 'cross-border shopping,' a practice where consumers purchase tobacco and alcohol in countries with lower taxes, thereby circumventing higher domestic taxes and undermining national public health policies.

A number of countries have expressed clear support for reducing the quantities individuals may import. These include Estonia, Belgium, the Czech Republic, and Finland. Furthermore, Austria, Hungary, Ireland, Latvia, France, Slovenia, Bulgaria, Malta, and Germany were also among the nations open to a review of Article 32. Notably, Finland, Estonia, and Germany have advocated for extending any amendments to Article 32 to include alcoholic beverages, not just tobacco products.

Current Regulations and the Impact of Illicit Trade

Under current EU guidelines, individuals are permitted to import substantial quantities of goods for personal use without additional duties. For tobacco, this includes up to 800 cigarettes (equivalent to four boxes) from one EU country to another. For alcohol, the allowances are 10 litres of spirits, 90 litres of wine (approximately 120 bottles), and 110 litres of beer. Quantities exceeding these limits may be considered commercial.

The illicit trade in tobacco and alcohol poses significant challenges across the EU. It leads to:

• Drained public budgets: Governments lose out on excise duties and VAT.
• Undermined public health efforts: Cheaper, untaxed products are more accessible, potentially increasing consumption.
• Risks to consumers and legitimate businesses: Unregulated products can be of unknown quality, and illicit trade distorts markets.

Challenges and Broader Context

Despite the strong support from several member states, the European Commission has appeared hesitant to include a review of Article 32 as part of the broader Tobacco Taxation Directive discussion. Some countries also argue that the directive cannot be amended solely for tobacco products, as it encompasses alcoholic products as well, though the rules for alcohol are currently more flexible.

Beyond traditional tobacco and alcohol, the issue extends to novel nicotine products. In May 2024, thirteen EU health ministers, including Estonia's Riina Sikkut, sent a joint letter to the European Commission urging stricter regulations and a ban on cross-border distance sales of these products. Minister Sikkut highlighted the complexity of enforcing national bans on distance sales when such sales remain permitted in other member states, leading to products flowing into areas where bans are in place and creating enforcement challenges.