Sweden has blocked EU plans for new minimum taxes on both nicotine pouches and e-liquid. After this week's negotiations in the Council of the EU, it is clear that the Swedish government says no - and since tax issues require unanimity, there will be no new nicotine taxes in Europe, at least not this time.
Sweden is blocking EU plans for new minimum taxes on nicotine pouches and e-liquid. As tax issues require unanimity among member states, a Swedish "no" vote was enough to block the proposal.
- "I have promised Swedish snus users that we will not allow the EU to shockingly increase the tax on white snus, and now I am honouring that promise," says Elisabeth Svantesson, Minister for Finance.
Since the European Commission presented its proposal for new EU-wide minimum taxes on nicotine products, the debate on e-cigarettes and nicotine pouches has gained new momentum across the Union. Sweden was in the spotlight early on, as Swedish taxes on nicotine pouches are significantly lower than the levels proposed by the Commission.
The original proposal would have raised the minimum tax on nicotine pouches from the current Swedish level of around SEK 200 per kg to the equivalent of around SEK 1 500 per kg. For consumers, this would have meant a price increase of around SEK 25 per pack.
From the outset, the Swedish government announced that such a large tax increase on a product used by large parts of the Swedish population was unacceptable. Following criticism from several member states, the proposal has been gradually slimmed down to around SEK 600 per kilo.
Sweden said no again
But that's not enough, says Minister of Finance Elisabeth Svantesson.
During Wednesday's negotiations, Sweden reiterated its rejection of the proposal. As new excise duties require unanimous support from all member states, this means that the process is now at a standstill - at least until a new proposal is presented.
- I will always put the interests of Swedes first. Other countries do not decide on our snus," Elisabeth Svantesson wrote in a post on X after the meeting.
The e-liquid is also covered
The EU proposal concerns not only nicotine pouches but also e-liquid, whether it contains nicotine or not.
Under the latest draft, all e-liquids would be taxed at €0.30 - around SEK 3 - per millilitre. For Swedish users, this would mainly affect shortfills, i.e. nicotine-free e-liquids used to mix their own liquid with the desired nicotine strength.
- ”We won't be able to sell e-liquid in the same way as today. It will probably be even more ”mix it yourself', with flavour concentrate, glycerine, propylene glycol and nicotine sold separately," says Linus Gustafsson, which operates Koyuki Vapor and manufactures e-liquid for the Swedish market.
He argues that the proposal risks having the opposite effect to what legislators say they want to achieve.
- Shortfills are mainly used by people who want lower nicotine levels than those found in pre-mixed products. If the aim is to reduce nicotine consumption, it is odd to make those products more expensive. In addition, there is a risk of increasing rather than reducing interest in home blending.
Could benefit Swedish traders
At the same time, an EU-wide tax on e-liquids could favour Swedish retailers in the short term.
Sweden already has a tax on e-liquid of between SEK 2 and 4 per millilitre, depending on nicotine strength. In several other EU countries, there is no such tax, which has made it common for Swedish consumers to buy nicotine shots from abroad.
- Margins on nicotine shots are already very low in Sweden. At the same time, it has become common for Swedes to buy their shortfill here at home and import the nicotine from France, for example, where there is no specific tax. So a common tax could certainly have some effect on the Swedish market," says Linus Gustafsson.
”One sacrifices vejparna”
According to Peter Beckett, opinion leader and founder of Clearing the Air news site, the negotiations on nicotine taxes have effectively pitted users of nicotine pouches and e-cigarettes against each other.
Initially, the Commission wanted to bring taxes on e-liquids more in line with the Swedish system, with different levels depending on concentration (although nicotine-free e-liquids would also be taxed). However, this position has changed as the tax on nicotine pouches has been reduced during the negotiations, in favour of pouches.
- Instead, a flat tax on all e-liquids has been agreed, which in practice means an increase for many users, while the tax on nicotine pouches has been reduced compared to the original proposals. "They are trying to appease the Swedes by sacrificing the vejps in the EU. It's a really ugly game," says Peter Beckett to Vejpkollen.
The question will come up again
For now, however, nothing is happening with the tax proposal.
According to several analysts Vejpkollen spoke to, it will be difficult to reach a compromise in the near future.
- Sweden can continue to say no as long as the proposals are above the Swedish levels. "But at the end of the day, this is also about the member states' right to decide on their own taxes. That's really the bigger issue," says Peter Beckett.
