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Tobacco Duty: Obligations for Businesses

With tobacco products, the duty is often worth more than the goods themselves. The rules are correspondingly strict, and a mistake in procurement, storage or sale is correspondingly expensive.

Markus Bitzer · As of: October 2026 · 5 min read

Tobacco duty is an excise duty. It is borne by the consumer, but it is owed by businesses: the manufacturer, the authorised warehousekeeper, the importer or whoever receives goods from another Member State. The legal basis is the Tobacco Tax Act (Tabaksteuergesetz, TabStG) and the Tobacco Tax Ordinance (Tabaksteuerverordnung, TabStV), which are based on the Excise Directive (EU) 2020/262 and the Tobacco Tax Directive 2011/64/EU. Responsibility lies with the Main Customs Offices (Hauptzollämter).

What is taxed

Under Section 1 TabStG, tobacco duty applies to tobacco products, i.e. cigarettes, cigars and cigarillos as well as smoking tobacco in the form of fine-cut tobacco and pipe tobacco. In addition, heated tobacco, waterpipe tobacco and so-called substitutes for tobacco products are separate taxable items. The substitutes include liquids for e-cigarettes, regardless of whether they contain nicotine. Anyone who manufactures, imports or receives liquids from other Member States is therefore just as liable to tobacco duty as a cigarette manufacturer.

The rates in Section 2 TabStG usually combine a quantity-based component with a component based on the retail selling price. Since 1 January 2026 the following applies:

  • Cigarettes: 12.28 cents per piece and 19.84 per cent of the retail selling price, at least the statutory minimum duty.
  • Fine-cut tobacco: EUR 61.58 per kilogram and 17.40 per cent of the retail selling price, also subject to a minimum duty.
  • Cigars and cigarillos: 1.4 cents per piece and 1.47 per cent of the retail selling price, subject to a minimum duty.
  • Pipe tobacco: EUR 15.66 per kilogram and 13.13 per cent of the retail selling price, at least EUR 26 per kilogram.
  • Heated tobacco: Duty as for pipe tobacco plus an additional duty of 80 per cent of the difference to the cigarette duty.
  • Waterpipe tobacco: Duty as for pipe tobacco plus EUR 23 per kilogram.
  • Substitutes (liquids): EUR 0.32 per millilitre.

On 6 July 2026 the Federal Government adopted a draft amendment to the Tobacco Tax Act providing for four annual increases from 1 January 2027 until 2030 for all seven categories. It has been published as Bundestag printed paper 21/7859. The legislative procedure is still ongoing; rates and timetable may change.

Tax stamps

Tobacco duty is not declared and transferred like other taxes but paid by means of tax stamps (Section 17 TabStG). Manufacturers and importers order the stamps from customs, calculate the duty themselves when doing so and affix them, cancelled, to every retail package. The tax stamp shows the package price and the package contents. For the trade, this results in fixed prices. The printed price may not be undercut towards consumers; discounts and free extras are not permitted (Section 26 TabStG).

Tax warehouse, duty suspension and EMCS

As long as tobacco products are manufactured or stored in an approved tax warehouse, the duty is suspended. It arises only when the goods leave the tax warehouse and are released for consumption. Manufacturing plants and tax warehouses need an authorisation from the Hauptzollamt under Sections 5 and 6 TabStG. Requirements include tax reliability, proper bookkeeping and, as a rule, the provision of a guarantee.

Under duty suspension, goods are moved between tax warehouses, including across borders within the EU, only with an electronic administrative document in the EMCS system. The consignee must confirm receipt promptly. Only the report of receipt discharges the procedure for the consignor. If it is missing or quantities do not match, the duty generally arises where the irregularity is established.

Supplies from other Member States and third countries

In practice, commercial supplies from other Member States are made under duty suspension to a tax warehouse or a registered consignee (Section 7 TabStG). Goods already released for consumption and duty-paid in another Member State can be delivered commercially only within narrow limits, namely between certified consignor and certified consignee under Section 23 TabStG, and only if the goods are exempt from the packaging requirement of Section 16 TabStG. Foreign tax stamps are not valid in Germany. For imports from third countries, tobacco duty arises under Section 21 TabStG on release for consumption, unless a duty suspension procedure follows directly. Import VAT is added to customs duty.

Inspections and risks

Tobacco products are under special tax supervision. Customs audits tax warehouses, checks supply chains and traders and reconciles stocks with EMCS data. Typical risks:

  • Goods without valid tax stamps: Anyone who takes possession of tobacco products on which duty has not been paid can become liable for the duty themselves, including a trader who bought them cheaply in good faith.
  • Handling tax-evaded goods (Steuerhehlerei): Anyone who buys or sells goods on which tobacco duty has been evaded commits a criminal offence under Section 374 of the Fiscal Code (Abgabenordnung, AO). Acting on a commercial basis and smuggling carry significantly higher penalties.
  • Undischarged movements: Missing reports of receipt, missing quantities or diversions cause the duty to arise for the consignor or consignee.
  • Liquids and new products: Particularly in online trade in e-cigarette accessories, duty obligations are overlooked, for example for supplies from other Member States or for bases and flavourings that may count as substitutes.

At EU level, the Commission proposed a recast of the Tobacco Tax Directive on 16 July 2025, COM(2025) 580, with higher minimum rates and the inclusion of e-cigarettes, heated tobacco and nicotine pouches. The proposal has stalled. The Council must decide unanimously; the European Parliament rejected the proposal on 17 June 2026 and called on the Commission to withdraw it. The consultation of Parliament on tax legislation is not binding, but politically an agreement is not currently in sight.

How to proceed

  1. Classify the products. Clarify for each product which duty category it falls into; for liquids, flavourings and novel products, preferably in writing with the Hauptzollamt.
  2. Check authorisations. Manufacturing, storage under duty suspension and receipt as a registered or certified consignee each require a separate authorisation.
  3. Check suppliers. Buy only from known sources and check tax stamps and prices. Conspicuously cheap offers are a warning sign.
  4. Monitor EMCS. Open administrative documents, missing quantities and deadlines should be checked daily and discrepancies clarified immediately.
  5. Plan price changes. If rates rise, you need new tax stamps and adjusted package prices in good time.

Especially with new products or supply routes, a review of the individual case is worthwhile before the first goods move. More on advice in excise duty matters can be found under Tax.

Further reading

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