Excise duties in the EU

What are excise duties? 

Excise duties are indirect taxes on specific goods such as alcohol, tobacco, energy products and electricity. 

As indirect taxes, they are incorporated into the price of the product and are therefore borne by consumers. 

They are national taxes imposed by member states, and the revenue goes entirely to the country where the products are sold or used. 

These taxes aim to:

• discourage harmful consumption (like smoking or excessive drinking)
• promote environmental sustainability
• raise revenue for public services 

EU legal framework on excise duties 

The EU establishes minimum levels of excise duties for certain categories of products. Member states must respect these minimum levels, but may apply higher rates and introduce additional national taxes. 

To ensure fairness and consistency across the EU, common rules govern how excise duties are applied in member states. These rules help to avoid distortions of trade in the single market, ensure fair competition between businesses and reduce administrative burdens for companies operating across borders.

The provisions ensure that:

• the same categories of products are subject to excise duties across the EU
• common rules apply when excise duty becomes chargeable
• harmonised procedures apply to the production, storage and movement of excise goods
• administrative cooperation between member states is guaranteed 

Decision-making at EU level 

EU legislation on excise duties is adopted under a special legislative procedure, reflecting the sensitivity of taxation matters for national sovereignty. 

The European Commission has the right of initiative and submits legislative proposals on excise duties. 

The Council adopts the legislation, and does so by acting unanimously. This means that all member states must agree before new rules can enter into force. 

The European Parliament is consulted and gives its opinion, but it does not co-legislate in this area. 

This procedure ensures that member states retain control over taxation decisions.

• Zvláštní legislativní postupy

Tobacco

The tobacco taxation directive sets minimum excise duty levels for manufactured tobacco products such as cigarettes, cigars and cigarillos, fine-cut tobacco for rolling cigarettes and other smoking tobacco.

EU rules also establish:

• the categories of manufactured tobacco subject to excise duties
• the basis on which the duty is calculated
• how the tax is structured

The aim of the directive is to reduce large differences in taxation between countries, as such disparities could otherwise encourage cross-border shopping or illicit trade.

However, member states may apply higher rates than the minimum set at EU level.

Revision of the tobacco taxation directive

In July 2025, the European Commission proposed a revision of the tobacco taxation directive as part of Europe's beating cancer plan, aiming to better align the taxation of tobacco and related products with public health objectives.

• increase minimum tax rates in order to reduce disparities between EU countries
• extend the scope of the directive to new products, such as e-cigarettes, heated tobacco products and nicotine pouches
• strengthen control measures concerning raw tobacco

The proposal is currently being discussed in the Council. The discussions are focused on the issues of updating EU rules and extending taxation to new tobacco and nicotine products. The discussions also highlight concerns among some member states about higher minimum excise duty rates and the proposed adjustment mechanism.

• Revision of the tobacco taxation directive (European Commission)

Energy products 

Energy products subject to excise duties include mineral oils, gas, electricity, alternative energy, aviation fuel. 

EU rules establish:

• minimum rates for different energy products
• common definitions and classifications 

Excise duties on energy products also interact with environmental and climate policy objectives. 

By setting minimum levels, the EU ensures that the single market for energy operates smoothly and avoids distortions of trade and competition that could result from large differences in national tax systems.

Revision of the energy taxation directive  

In July 2021, the European Commission proposed a revision of the directive as part of the European Green Deal and the Fit for 55 package. 

The proposal aims to align the taxation of energy products with the EU’s climate and energy objectives. 

In particular, it proposes to: 

• update the minimum tax rates and align them more closely with the environmental impact of different energy sources
• broaden the tax base to cover new energy products and technologies
• reduce outdated exemptions and reduced rates, particularly for certain fossil fuels
• encourage the use of cleaner energy sources 

• Revision of the energy taxation directive (European Commission)
• Fit for 55: jakým způsobem chce EU změnit zdanění energie

Alcohol

The EU sets minimum excise duty rates for alcohol and alcoholic beverages such as beer, wine, other fermented drinks, intermediate products and spirits.

EU legislation on alcohol also covers:

• the categories of alcohol and alcoholic drinks subject to excise duties

• the basis on which the duty is calculated

• how the tax is structured

Excise duties on alcohol also support public health objectives, while ensuring fair competition within the single market.

However, member states are free to apply excise duty rates above these minimum levels of taxation, according to their own national needs.