A Finnish company is suspected of selling large quantities of nicotine pouches without paying the tax introduced when the products were legalised in the country. According to the Finnish customs authority, the tax loss is around €2.5 million.
The investigation concerns a company that, according to the authorities, imported nicotine pouches from other EU countries and sold them to shops in Finland. However, the company had not registered as a taxable person for the nicotine products and had not submitted the required declarations.
When authorities checked the business in summer 2024, they found over 1.1 million nicotine pouches in stock. On these it should have been paid about 2.5 million euros in excise duties, according to Finnish Customs.
Two people are now suspected of serious tax fraud and serious accounting offences.
The drama of regulation
The case is linked to the new rules introduced when Finland opened up to the legal sale of nicotine pouches. The products had long been on a grey market and could only be sold legally in pharmacies. At the urging of the Finnish Medicines Agency and other interest groups, the previous government tried to ban nicotine pouches. This failed and after the 2023 elections, a new government decided to regulate and tax the pouches instead, in a way similar to the taxation of other nicotine products.
Tax and flavour bans
As Vejpkollen previously reported the Finnish government proposed a relatively high tax on nicotine pouches as early as 2023 - which significantly increased retail prices.
Several organisations criticised the proposal on the grounds that heavy taxation could have undesirable effects.
- If prices rise too much, consumers will continue to buy from abroad or through rogue traders, warned consumer organisation Vaper Finland.
At the same time, the government also chose to introduce severe restrictions on flavourings in nicotine pouches. Unlike countries such as Sweden, only artificial tobacco flavours and mint are allowed to be sold in Finland. Similar rules also apply to the e-liquid in e-cigarettes - where even vegetable glycerine and propylene glycol are taxed - if it is intended to be used in an e-cigarette.
Risk of parallel trade
Differences in rules and taxes between EU countries also make the market difficult to control. Nicotine pouches are legally sold in several European countries and taxation varies widely - from no specific tax at all to relatively high levels.
This means that products can be moved relatively easily across borders within the EU single market.
According to Finnish Customs, the trade in nicotine pouches seems to have become an increasingly common feature of their economic crime investigations since the new rules were introduced.
Growing market for smokeless nicotine products
Nicotine pouches - small sachets containing nicotine but no tobacco - have grown rapidly in popularity in the Nordic countries in recent years. The products are often used as an alternative to cigarettes or traditional snuff.
At the same time, the growing market has put pressure on regulators to find a balance between regulation, taxation and control.
The preliminary investigation in this case is expected to be handed over to prosecutors later this year.
