An economic assessment of the drivers of the illicit cigarette trade in the EU

In 2024, 39.2 billion illicit cigarettes were consumed in the EU, which equated to 9.2% of the total market. These sales are estimated to have cost €14.9 billion in lost excise and VAT receipts, which could have been used to fund vital public services.

The level of excise duty and VAT levied on duty paid cigarettes is one of the main drivers of the illicit trade in cigarettes in the EU and elsewhere. Criminals can sell illegal cigarettes at lower prices because they avoid paying taxes, making them attractive to price-sensitive consumers. While higher taxes may risk expanding the illicit cigarette trade, effective administrative measures and enforcement can help contain it.

Nevertheless, once illicit trade becomes entrenched in a market, it can be extremely difficult to eradicate.

Download the report to understand the economic and market impacts of the proposed increases in cigarette excise duty contained in the European Commission’s latest Tobacco Excise Directive (TED) proposal.