Spain Introduces New Tax on E-Cigarettes and Related Products
On December 21, 2024, the Spanish government published Law 7/2024, which introduces a new tax on liquids for electronic cigarettes and other products related to tobacco (the “new Tax”). This law is part of a broader package of measures that also includes a Complementary Tax to comply with the EU’s Pillar Two directive on minimum corporate taxation and a Tax on the interest and commission margin of certain financial entities.
While Law 7/2024 initially set the new Tax to take effect from January 1, 2025, the government subsequently passed Royal Decree-law 9/2024 on December 23, which postponed the entry into force until April 1, 2025. This delay aims to provide businesses and consumers with more time to understand and prepare for the new obligations imposed by the regulation.
The approval of this new Tax responds to the evolving nature of the sector. With the emergence of new products not directly covered by Directive 2011/64/EU on the structure and rates of excise duty applied to manufactured tobacco, both the Court of Justice of the European Union (CJEU) at the community level and different Member States in relation to their local regulations have had to resort to purposive interpretations to try to equalize the taxation of these new products with traditional tobacco products.
Scope of the New Tax
The new Tax covers the following products:
- Liquids that, with or without nicotine, can be used in electronic cigarettes or similar vaporizing devices or to refill them. Electronic cigarettes are considered products that can be used for the consumption of vapor through a mouthpiece or any component of that product, including a cartridge, tank, and the device itself, which may be disposable or rechargeable (through a tank or single-use cartridges).
- Oral administration products that contain nicotine but not tobacco, mixed with vegetable fibers or equivalent substrate, presented in a pouch or porous pouches or equivalent format; or any other nicotine product that does not contain tobacco.
The new Tax will apply the following rates:
Product | Tax Rate |
---|---|
E-cigarette liquid with no nicotine or up to 15 mg/ml | €0.15 per ml |
E-cigarette liquid with more than 15 mg/ml of nicotine | €0.20 per ml |
Nicotine pouches | €0.10 per gram |
Other nicotine products | €0.10 per gram |
For an average e-cigarette user who consumes about 3 ml of liquid per day, the new Tax will add about 60 cents per day of use. Assuming they vape every day, this amounts to around €219 more per year due to the Tax.
Administration and Compliance
The Ministry of Finance has approved two new tax forms to manage this Tax. Form 573 will allow taxpayers to self-assess the Tax, while Form A24 will facilitate the refund of the Tax for products sent to other European Union countries.
Manufacturers, distributors, and other economic operators related to these products must register in the census of entrepreneurs and the territorial registry of the Tax before starting their activities subject to the Tax. Monthly self-assessments must be submitted, with taxpayers having until the first twenty days of each month to declare and pay the amounts corresponding to the previous month, whenever there are accruals.
Transitional Provisions and Objectives
To facilitate the implementation of the Tax, transitional provisions have been included. For example, operators already active will have a period of thirty business days to register after the Tax enters into force. In addition, the assessments for January, February, and March 2025 may be submitted jointly in April.
The main objective of the new Tax is to regulate the consumption of these products and reinforce the tax framework in line with traditional excise taxes, such as the one levied on tobacco products. According to the Ministry of Finance, the measure responds to criteria of proportionality and legal certainty.
Conclusion
The new e-cigarette tax in Spain represents a significant change for the vaping industry and consumers. By levying taxes on e-cigarette liquids, nicotine pouches, and other related products, the government aims to regulate consumption and bring the taxation of these products more in line with traditional tobacco taxes.
Manufacturers, distributors, and retailers will need to carefully review the new law and ensure they comply with registration and reporting requirements. For consumers, the Tax will mean a notable increase in the cost of vaping, with an average user potentially paying over €200 more per year.
As the vaping industry continues to evolve, it’s likely that we’ll see further regulatory and tax changes in Spain and across the EU. Striking the right balance between public health, consumer choice, and fair taxation will be an ongoing challenge for policymakers in the years to come.
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