Brussels, 5 February 2026
Tobacco Europe provided the European Commission with its views on the customs reform: TE submission COM EU Customs Reform de minimis 26.02.05
Brussels, 3 February 2026
Tobacco Europe contributed to the Call for Evidence on Better Regulation.
Find more information on our position here: TE response COM call for evidence better regulation 26.02.03
Brussels, 31 October 2025
Tobacco Europe contributed to the Call for Feedback on the Tobacco Excise Directive.
Find more information on our position here: 20251030 – TE contribution to the Public Consultation on TED
Brussels, 20 September 2024
Tobacco Europe thanks the Ombudsman’s inquiry team for the diligent work carried out regarding the potential conflict of interest with ENSP in the framework contract on tobacco control policy, and welcomes the opportunity to provide comments to the Report on the meeting of the European Ombudsman inquiry team with representatives of the European Commission on how it handled these alleged conflicts.
All comments provided by Tobacco Europe can be found in the document here: Tobacco Europe’s comments to Ombudsman Report meeting 20.09.24
RE: Procedural shortfalls identified in the public consultation on the Evaluation of The Legislative Framework for Tobacco Control in line with the Better Regulation Guidelines and other applicable frameworks
Brussels, 23 June 2023
Tobacco Europe position on the Customs Reform
Position for the Study assessing articles 32 and 36 of the “Horizontal Directive” (2008/118/EC).
Summary
The current wording of Article 32 and the additio nal Commission’s explanatory statement already give Member States the flexibility and legal clarity they need to
effectively enforce this regulation;
The ‘Horizontal Directive’ does not provide for further product regulation s or sales restriction , but only sets out technicalities for handling these Public Health
objectives are already addressed via the ‘vertical’ Directive s (e.g. 2011/64/EU) as well as Directive 2014/40/EU
The tobacco industry has recently implemented an unprecedented Tracking & Tracing system, which provide national authorities with an efficient monitoring system;
Non domestic duty paid consumption of tobacco products is best addressed by implementing smart taxation policies.
Introduction
The Council is deciding on a recast1 of the “Horizontal Directive” (2008/118/EC), while in the meantime, the European Commission (DG TAXUD) has commissioned a study to assess whether articles 32 and 36, respectively on cross-border purchases of excise goods by private individuals and distance-selling of excise goods, can have a potential negative impact on public health.
To the best of their knowledge, ESTA and Tobacco Europe are not aware of any negative impact on public health resulting from Directive 2008/118/EC, including its articles 32 and 36. Although manufactured tobacco is associated with health risks, the Horizontal Directive only sets out the technicalities of handling and moving excise goods across the EU. It does not interfere with existing product regulation. The products, manufacturing and sale, and taxation levels are already covered by other European and national legislation, ensuring the public health objective is met (e.g. EU large and harmonised combined health warnings across the Union). The general arrangements are necessary common rules to facilitate cross-border trade as tax controls at the borders have been abolished with the establishment of the Single Market, in 1993. It should therefore be very clear that general arrangements are not to be tinkered with to address any purported negative effect resulting from diversity in tax levels.
This study should take into account that Directive 2008/118/EC is legally based on Article 113 TFEU which enables Member States to unanimously “adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the European Commission, Proposal for a Council Directive laying down the general arrangements for excise duty (recast) – COM/2018/346 final, 25 May 2018. We recall that no regulatory failures associated with article 32 were identified or addressed in the REFIT Evaluation nor are mentioned in the Commission’s report to the Council and European Parliament on the implementation of the Directive.
Article 36 – Distance Selling
Article 36 sets out the administrative procedures and charging conditions for distance selling, and the current discussion on a potential one-stop-shop for excise goods aims solely at simplifying those procedures where possible. This cannot have any negative impact on public health. Directive 2014/40/EU4 sets clear requirements and conditions for distance selling of tobacco products, including registration of retail outlets, information to be provided and verifications to be conducted. This Directive also allows Member States to simply prohibit distance selling of tobacco products to consumers if deemed necessary.
Article 32 – Acquisition by private individuals
Concerning Article 32 and the concept of “personal use”, ESTA and Tobacco Europe believe that the revised wording initially proposed by the European Commission as part of the recast serves its purpose well, referring to “goods acquired by a private individual for his own use, and transported from the territory of one Member State to the territory of another Member State by the private individual”. The second paragraph provides even further guidance and criteria to determine whether goods are used for personal use or not. This gives Member States the flexibility and the legal clarity needed to effectively implement and enforce this legislation. This was further supported by the statement of the European Commission on the implementation of this article, which was annexed to the latest legislative proposal in May 20196. The statement clarifies that: “Member States may lay down guide levels, as a form of evidence as to how the goods are to be used. Quantities of excise goods below the guide levels can be assumed to be for own use. If the guide levels are exceeded, a Member State is considered to have reasonable grounds to suspect that the goods are not for own use unless it is evidenced otherwise. If it is not evidenced that the goods are for own use, excise duty shall become due in the Member State of consumption”.
As it stands, Article 32 is more appropriate and thorough than applying an “average yearly personal consumption” method as advocated by some stakeholders. Such an approach creates regulatory weaknesses whilst attempting to address a non-existent issue. Using a “yearly average” method requires to determine whether such applies per Member State or at EU level. Keeping an average up to date would also significantly increase the burden for national authorities and European legislators.
Several stakeholders have also requested to lower the minimum thresholds per product as established by the Directive, or even to set binding limits. This ignores the free circulation of goods in the EU and the very basic principles of the Internal Market, on which this Directive is based. Enforcing such additional restrictions also requires establishing stricter border controls, thereby increasing the administrative burden and cost for the national authorities.
One of the assumptions made by PwC, the consultant commissioned by DG TAXUD to assess Art 32 and 36 of the Horizontal Directive, is that the “absence of an efficient monitoring system” may conflict with health policies. Our associations would like to point out that the tobacco industry is currently implementing an unprecedented Tracking & Tracing system, which aims to enable national authorities to track any product from manufacturing to the point of sale. This system also requires each product to bear a security feature which will in practice allow authorities to determine the intended country of sale.
In more general terms, it is wrong to assume that a decrease of cross-border purchases would translate into a similar decrease of consumption. In absence of legal cheaper alternatives (i.e. cross-border purchases), price-sensitive consumers will switch to the illicit market and unregulated product, undermining the presumed health objectives. The recent London Economics Study clearly shows that taxation policy must recognise the interdependency between markets across national borders. The Study also demonstrates that when consumers are outpriced following a tax increase, illegal and counterfeited products often substitute legal domestic consumption, which presents much higher risks for public health and diminishing government revenues.
In that respect, cross-border purchases by private individuals are a better and legal alternative to illicit trade. Lowering the thresholds or establishing binding limits would therefore disrupt competition within the internal market and take away a consumers’ legal alternative to illicitly traded tobacco, thereby hindering the Directive’s objective to safeguard Member States’ fiscal revenues.
Rather than lowering national guide levels as a quick-fix solution, cross-border purchases are best addressed by implementing smart taxation policies in the Member States. As put by the European Commission in its answer to Petition N° 0645/2017 in February 20188: “Member States are perfectly aware of the excise duty rates applied by other Member States and particularly those applied in their neighbouring Member States and that they set their own excise duty rates with a view to avoiding the risk of tax losses”.
Tobacco Europe (formerly The Confederation of European Cigarette Manufacturers – CECCM) represents the common views of major European–based cigarette manufacturers such as British American Tobacco (BAT), Imperial Brands (IMB), and Japan Tobacco International (JTI).
Information gathering under Article 9 of the EU Enforcement Regulation regarding planned EU commercial policy measures further to the adjudication of a trade dispute with the United States on Measures Affecting Trade in Large Civil Aircraft under the WTO Dispute Settlement Understanding (“DSU”)
The Commission seeks information and views regarding the EU’s economic interests in accordance with Article 9 of Regulation (EU) No 654/2014 of the European Parliament and of the Council of 15 May 2014. The Commission expects to receive input from private stakeholders who may be affected by planned EU commercial policy measures.
The information gathering should provide the Commission with input to assist it in assessing the scope and parameters of planned commercial policy measures. Your input is important in this process and we thank you in advance for your contribution. The Word document can be used to fill in your comments directly under the relevant points.
Context
On 11 April 2019, the WTO Dispute Settlement Body (“DSB”) adopted its recommendations and rulings in United States – Measures Affecting Trade in Large Civil Aircraft (Second complaint) – Recourse to Article 21.5 of the DSU by the European Union, confirming that the United States has failed to bring its measures, found to be inconsistent with the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”), into conformity with its obligations under that Agreement.
In accordance with paragraph 8 of the “Agreed Procedures under Articles 21 and 22 of the Dispute Settlement Understanding and Article 7 of the SCM Agreement”1 between the European Union and the United States with respect to this dispute, the European Union is taking steps towards requesting the Article 22.6 arbitrator to resume its work.
Upon the completion of the arbitrator’s work the European Union will request the DSB for an authorisation to take countermeasures against the United States. In its original request pursuant to Article 22.2 of the DSU and Articles 4.10 and 7.9 of the SCM Agreement related to this dispute (dated 2 October 2012), the European Union sought authorization from the DSB to take countermeasures against the United States in an annual amount of USD 12 billion.
The European Union’s countermeasures would include suspension of tariff concessions and other related obligations under the General Agreement of Tariffs and Trade 1994 and under the SCM Agreement on a list of selected US products.
Regulation (EU) No 654/2014 of the European Parliament and of the Council of 15 May 2014 (the Enforcement Regulation)2 provides for the legal basis for the EU to suspend concessions
1 WTO/DS353/14
2 Regulation (EU) No 654/2014 of the European Parliament and of the Council of 15 May 2014 concerning the exercise of the Union’s rights for the application and enforcement of international trade rules and amending Council Regulation (EC) No 3286/94 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization (OJ L 189, 27.6.2014, p. 50–58; 2014R0654 — EN — 05.11.2015 — 001.001) or other obligations under the multilateral and plurilateral agreements covered by the WTO DSU following the adjudication of trade disputes under the WTO DSU.
Where action is necessary to safeguard the EU’s interests in such cases, the Commission may take appropriate commercial policy measures.
In line with Article 4 (2) a) of the Enforcement Regulation, in determining the appropriate commercial policy measures where concessions or other obligations are suspended following the adjudication of a trade dispute under the WTO DSU, their level shall not exceed the level authorised by the WTO DSB.
Further to Article 4 (3) of the Enforcement Regulation, these commercial policy measures must be determined on the basis of the following criteria, where relevant, in light of available information and of the EU’s general interest:
a) effectiveness in inducing compliance of third countries with international trade rules;
b) availability of alternative sources of supply for the goods concerned, in order to avoid or minimise any negative impact on downstream industries, contracting authorities or entities, or final consumers within the EU;
c) avoidance of disproportionate administrative complexity and costs in the application of the measures;
d) any specific criteria that may be established in international trade agreements.
Possible Commercial Policy Measures
In order to be in a position to promptly take action on the basis of and consistent with the decision of the arbitrator under Article 22 DSU, the Commission is required to take the respective steps under the Enforcement Regulation and the WTO DSU. In this regard, the Commission is currently assessing the parameters of the planned commercial policy measures. The Commission is considering commercial policy measures in the form of the imposition of increased customs duties, including additional ad valorem duties of up to 100 percent, on certain products from the United States.
The Commission services have identified products originating in the United States that could potentially be subject to increased customs duties. These products, or a subset of them, may be affected only if necessary and in a proportionate manner, in line with the requirements of the Enforcement Regulation described above. The products can be consulted in the enclosed document ‘List of Products’ uploaded on the DG TRADE webpage under the current Information gathering exercise.
Information gathering procedure
In assessing the parameters of planned commercial policy measures, the Commission seeks input from private stakeholders who may be affected by the planned EU commercial policy measures, as outlined above, on the products listed in the document ‘List of Products’ uploaded on the DG TRADE webpage under the current Information gathering exercise.
Private stakeholders are invited to provide any views and information they consider relevant to EU economic interests in connection with the products which could be subject to possible EU commercial policy measures, as well as any other relevant input.
To receive full consideration, written comments should be as detailed as possible and include supporting documents.
Information received pursuant to Regulation (EU) No 654/2014 will be used only for the purpose for which it was requested.
Neither the European Parliament, nor the Council, nor the Commission, nor Member States, nor their respective officials shall reveal any information of a confidential nature received pursuant to Regulation (EU) No 654/2014, without specific permission from the supplier of such information.
The supplier of information may request that information supplied be treated as confidential. In such cases, it must be accompanied by a non-confidential summary which presents the information in a generalised form or a statement of the reasons why the information cannot be summarised. If it appears that a request for confidentiality is not justified and if the supplier is unwilling either to make the information public or to authorise its disclosure in generalised or summary form, the information in question may be disregarded. The confidential treatment will not preclude the disclosure of general information by the institutions of the EU and the authorities of the Member States. Such disclosure must take into account the legitimate interest of the parties concerned in not having their business secrets divulged.
Information received pursuant to Regulation (EU) No 654/2014 may be subject to a request for access to documents under EU Regulation 1049/2001 on public access to European Parliament, Council and Commission documents3. In such cases, the request will be assessed against the conditions set out in Regulation 1049/2001 and in accordance with applicable data protection rules.
Deadline Please fill in the form and submit it at the latest by 31 May 2019, 12:00 am (UTC+01:00), Brussels, to the following e-mail address:
TRADE-REG-654-2014-INFOGATHERING@ec.europa.eu
For more information:
TRADE-REG-654-2014-INFOGATHERING@ec.europa.eu
3 Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (OJ L 145, 31.5.2001, p. 43)
INFORMATION GATHERING FORM
Please fill in this form and submit it at the latest by 31 May 2019, 12:00 am (UTC+01:00), Brussels, to the following e-mail address:
TRADE-REG-654-2014-INFOGATHERING@ec.europa.eu
1. Name: Nathalie Darge
2. Organisation: Confederation of European Cigarette Manufacturers (CECCM)
3. Contact details: nathalie.darge@ceccm.eu
4. Language of the submission: English
5. Your views and information regarding the EU economic interests in the products originating in the United States which could be subject to EU commercial policy measures, listed in the enclosed document ‘List of Products’:
The following points summarize CECCM’s views on the public information gathering regarding planned EU commercial policy measures for import of goods originating in the United States into the EU:
• The preliminary list of products includes US tobacco leaf classified under the customs Tariff heading 2401- “Unmanufactured tobacco; Tobacco refuse”.
• US tobacco leaf cannot be substituted with tobacco leaf produced in other regions (e.g. Africa or the EU).
• Additional customs duties will be borne by EU manufacturers, and have no impact on US exports, as intended by these commercial policy measures.
• EU tobacco manufacturers may need to pass on the additional costs to consumers in the form of higher prices. These higher prices could result in a decline of a Member State excise revenues due to consumers switching to illicit products.
A detailed position together with the relevant information for the public information is provided below in the “Response to the public information regarding planned EU commercial policy measures further to the adjudication of a trade dispute with the United States on Measures Affecting Trade in Large Civil Aircraft under the WTO Dispute Settlement Understanding”.
6. Any other relevant input:
Not Applicable.
Response to the public information regarding planned EU commercial policy measures further to the adjudication of a trade dispute with the United States on Measures Affecting Trade in Large Civil Aircraft under the WTO Dispute Settlement Understanding.
1. Introduction
The EU is currently assessing the parameters of the planned commercial policy measures in the form of the imposition of increased customs duties, including additional ad valorem duties of up to 100 percent, on certain products from the US.
The provisional list of products considered for additional import duties cover a range of items, including unmanufactured tobacco and tobacco refuse.
Due to the specific nature and characteristics of the US unmanufactured tobacco, the affected tobacco is not replaceable by tobacco from other sources. Additional import duties should therefore not be imposed on these products.
2. Impact of additional customs duties for imports of unmanufactured tobacco and tobacco refuse in the EU
The proposed additional customs duties for US leaf would have a negative impact on the EU tobacco industry without bringing a significant contribution towards the EU objective, namely to induce US compliance with the outcome in the Large Civil Aircraft dispute at the WTO.
2.1. Unmanufactured tobacco imported from the US cannot be substituted with unmanufactured tobacco produced in other countries (e.g. the EU)
The characteristics of unmanufactured tobacco largely depends on natural factors such as climate, soil, water, etc. There are significant differences between tobacco leaf aroma, taste and toxicological characteristics in tobacco from various origins. US tobacco leaf has a flavor and aroma which cannot be found in the tobacco leaf produced in other countries.
Therefore, a certain amount of US grown tobacco is needed to sustain the aroma, taste and toxicological characteristics of manufactured tobacco products produced in the EU. US leaf cannot be substituted/replaced with tobacco leaf produced in the EU.
2.2. The EU manufacturers cannot absorb the cost of the additional customs duties imposed for the US unmanufactured tobacco and tobacco refuse
As with any agricultural product, tobacco leaf becomes available once the tobacco crop can be collected (once per year). In order to allow the farmers to plan for the tobacco crop, the commercial agreements for tobacco leaf purchases tend to be agreed on a multi annual basis. EU manufacturers are bound by long term contracts which would contractually oblige EU businesses to continue buying US tobacco for the medium to long term.
The public consultations materials indicate that the additional customs duties can be up to 100% on certain goods from the United States. This would result in a substantial cost to EU based manufacturers. EU manufacturers will not be able to absorb this cost.
This will lead to a situation in which the costs incurred with the additional customs duties imposed for the US unmanufactured tobacco should be passed on to consumers through an increase of the finished product price.
2.3. Additional customs duties lead to higher prices for finished products
An increase in duties on US tobacco will have to be passed on to consumers, in the form of higher prices.
If EU based manufacturers pass on the higher customs duties to consumers in the form of higher product prices, this will result in a potential increase in duty-avoiding tobacco products, particularly from bordering non-EU Member States, given the increase in cigarette prices.
3. Conclusions
Additional customs duties should not be imposed for the US unmanufactured tobacco and tobacco refuse imported in the EU.
Due to the US tobacco leaf objective characteristics (taste, aroma), these cannot be substituted with tobacco leaf produced in other regions such as Africa or the EU. The costs incurred through additional customs duties for US leaf will be passed on to EU consumers in the form of higher prices for finished products. An increase in prices will ultimately have a negative impact for the Member States tax revenues due to a significant decline in excise duty and boost illicit trade.
The classification of e-cigarettes in the 2022 WCO Harmonized Commodity Description and Coding System
The Confederation of European Community Cigarette Manufacturers (CECCM) urges EU Member States to: • support only those proposals for creating new headings and subheadings in the WCO HS2022 classification that make a clear distinction between e-cigarettes (which do not contain tobacco) and tobacco products; • continue to support the WCO/WHO classification proposal which does make such a distinction; and • oppose the WCO Secretariat proposal which would classify the liquids used with e-cigarettes and certain tobacco products very closely together.
At the next World Customs Organization (WCO) Harmonized System Committee (HSC) meeting in March 2019, the WCO Secretariat’s proposal for the new Chapter 24 title, headings and subheadings will be discussed.
The European Commission seeks a mandate for this meeting from the EU Member States on the 25th of January in the EU Customs Union Working Party.
The Commission’s preferred option is to support the WCO/WHO proposal.
However, the Commission also recognises that the WCO Secretariat’s intention is to discuss only its own proposal at the HSC meeting and for the WCO/WHO proposal to not be considered. In order to not block the decision-making process, the Commission has suggested that the EU Member States should agree to the proposal put forward by the WCO Secretariat, even though it is, in their opinion, an inferior option.
The WCO Secretariat’s intention that only its proposal will be discussed is despite a continued lack of consensus between the WCO’s contracting parties:
• In the September 2018 HSC meeting, the WCO Secretariat proposal received 53% of the total votes cast, only marginally more than the support for the WHO / WCO Secretariat’s joint proposal.
• At the Review Sub-Committee (RSC) in November 2018, several contracting parties continued to object to the WCO Secretariat’s proposal, spoke in favour of other proposals, and no consensus was reached.
The WCO Secretariat’s proposal would:
• move the liquids used with e-cigarettes into Chapter 24 of the HS that deals with tobacco products; and
• classify e-liquids (2404.12) under the same heading as products intended for inhalation without combustion that contain tobacco (2404.11).
The new headings and subheadings being proposed by the WCO Secretariat pose serious concerns for the e-cigarette industry and for public health.
A range of taxes on e-cigarette products are significantly affected by their customs classification. Import tariffs are determined directly by a product’s customs coding. And, as the WCO acknowledges, national taxes, such as excise duties, are also influenced by a product’s customs classification.
Classifying products containing tobacco and products not containing tobacco under the same heading – as in the WCO Secretariat’s proposal – may be seen as an endorsement for an increase in import duties and excise on e-cigarettes, as well as the harmonization of regulation between e-cigarettes (which contain no tobacco) and tobacco products.
This could damage the sale of e-cigarette products, undermine the international trade in them and have negative effects for public health. The main purpose of the WCO’s classification system is to facilitate international trade in products. In fact, it risks doing the precise opposite for e-cigarettes.
The WCO Secretariat’s proposal would also be inconsistent with a significant, and growing, body of evidence from independent experts1 that e-cigarettes are potentially significantly less harmful than combustible tobacco. Many influential studies have concluded that e-cigarettes are only 5% (or less) as harmful as smoking tobacco.
Because of the emerging evidence on their potential harm reduction compared to combustible tobacco products, a number of high-profile governmental reviews have recently called for a different treatment of e-cigarette tax and regulation from tobacco products:
• In an ongoing review of the European Union’s Council Directive 2011/64/EU, which defines the product categories, structure and minimum rates for excise duties on manufactured tobacco in the EU, responses received by the European Commission show a clear consensus that e-cigarettes should not be taxed like tobacco products. Out of the total 11,410 responses submitted to the consultation2: 88% of respondents agreed that e-cigarettes are much less harmful than conventional tobacco products; 85% agreed that e-cigarettes may support smoking cessation; 77% disagreed that e-cigarettes should be subject to the same excise treatment as conventional cigarettes; and 87% agreed that e-cigarettes are not tobacco products so should not be subject to tobacco excise legislation.
• A Command Paper published in December 2018 by the UK’s Secretary of State for Health and Social Care3 confirms the government’s firm belief in the reduced risk profile of e-cigarettes and calls for proportionate regulation of e-cigarettes based on the reduced risk profile of these devices. Recommendation 6 of the Command Paper endorses the UK’s current practice of treating e-cigarettes as consumer products for taxation purposes, subject only to the 20% Value Added Tax.
• Adopting the WCO Secretariat’s proposal in its current form would contradict discussions that took place in October 2018 at the eighth Conference of the Parties (COP8) to discuss the WHO Framework Convention on Tobacco Control (FCTC). The FCTC is a treaty signed by 168 countries, legally binding in 181 countries, and for all intents and purposes serves as the global blueprint for tobacco regulation. The parties to the treaty agree that heated tobacco products are covered under the auspices of the FCTC. But attempts to bring e-cigarettes under the umbrella of the convention were rejected at COP8. It would be inappropriate to classify e-cigarettes closely together with tobacco products in the customs classification system before any agreement is reached on their global regulatory treatment under the FCTC.
Additionally, in a 2016 case, the Court of Justice of the European Union ruled that: “… electronic cigarettes display different objective characteristics from those of tobacco products.4” This ruling was reiterated in the Court of Justice of the European Union’s judgement in November 20185. Therefore, two recent judgements by the EU’s most senior court confirmed that the objective characteristics of e-cigarettes are different, in law, to those of tobacco products. It would be anomalous for the customs classification of e-cigarettes to be similar to those of any tobacco product.
It is important that the decisions made by customs authorities do not contradict the approach by other government departments at both a national and international level. If the WCO Secretariat’s proposal was adopted in its existing form, it would clearly do so.
Moreover, another important purpose of the HS is: “… to promote as close a correlation as possible between import and export trade statistics and production statistics …”6 Should the WCO Secretariat’s proposal be adopted in its current form, production statistics for heading 24.04 would be flawed insofar as they would include both products that contain tobacco and products that contain no tobacco.
1 See Public Health England (PHE) report at https://www.gov.uk/government/publications/e-cigarettes-and-heated-tobacco-products-evidence-review
See Royal College of Physicians’ report at https://www.rcplondon.ac.uk/news/promote-e-cigarettes-widely-substitute-smoking-says-new-rcp-report
2 See https://circabc.europa.eu/sd/a/e6a09ea7-1c96-4d2b-9e53-ff10bef7be94/Tobacco%20public%20consultation%202018%20statistical%20report.pdf and https://circabc.europa.eu/faces/jsp/extension/wai/navigation/container.jsp
3 See https://assets.publishing.service.gov.uk/government/uploads/ system/uploads/attachment_data/file/762847/government-response-to-science-and-technology-committee_s-report-on-e-cig.pdf and https://vaporproductstax.com/2019/01/02/government-supports-taxation/
4 Case C-477/14, Pillbox 38 (UK) Limited, trading as Totally Wicked v Secretary of State for Health, ECLI:EU:C:2016:324, para. 36, http://curia.europa.eu/juris/document/document.jsf?text=&docid=177723&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=6455726
5 Case C 151/17, Swedish Match AB v Secretary of State for Health, ECLI:EU:C:2018:938, para. 29, http://curia.europa.eu/juris/document/document.jsf?text=&docid=207969&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=6473289
6 http://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hs_convention.aspx
In summary, an inappropriate customs tariff classification of e-cigarette products risks the unintended consequences of damaging the international trade in them. There is, in stark contrast, absolutely no downside to either the WCO or to individual customs departments from a much clearer separation of e-cigarettes from tobacco in the customs system.
Furthermore, introducing no further changes to the HS, by retaining the status quo, would be a preferable option to the WCO Secretariat’s proposal. This would avoid the risk of e-cigarettes being unduly regulated and taxed like tobacco products in certain countries.
If this cannot be achieved, the mandate for the Commission should be broad enough to capture changes to the WCO Secretariat proposal that would allow amendments that are more in line with the WCO/WHO proposal.
Recast of the Council the Directive 2008/118/EC concerning the general arrangements for excise duty
CECCM Position paper
CECCM1 welcomes the Commission’s proposal on the recast of the Council the Directive 2008/118/EC concerning the general arrangements for excise duty published by the Commission on 25 May 2018.
Together with its members, CECCM would like to suggest some amendments, notably in view of the upcoming Council meeting (Working Party on Tax Questions) due to be held on 9 November that will focus, among other issues, on this Recast Directive.
In general, CECCM supports Commission’s view that export followed by external transit should be allowed for excise goods, starting with the solutions put forward to further harmonize excise and customs procedures (both on the import and export sides). However, there’ s a need to ensure that the principles of internal market are properly reflected, notably in the case of refund procedures following the destruction of goods or tax markings under customs supervision. Furthermore, there’s a need to clarify that tax stamps should not trigger excise liability if not used in production or if the goods are not made available to the consumer, as an excise tax is first and foremost a tax on consumption.
CECCM also calls on the introduction of a harmonised “Right to be heard” for economic operators, in accordance with the Union Customs Code. Currently, national jurisdictions provide some recourse when adverse decisions are made but the ease of challenging such decisions in the field of excise varies greatly across the EU. The “right to be heard”, which is already established in the European Customs Code, states that a person or an economic operator has a right to be heard whenever customs authorities “intend to take a decision that would adversely affect the person to whom the decision is addressed”. This suggestion would notably reflect the Impact Assessment for the revision of Directive 2008/118/EC which clearly demonstrated that harmonising the “right to be heard” would have significant benefits for both economic operators and national administrations, especially in terms or suspected shortages or excesses.
Regarding guarantees, CECCM believes some improvements should be made, particularly on the need to ensure a mutual recognition for guarantees in the EU. Too many Member States still requires operators to lodge the guarantee in a financial institution established on its own territory. This substantially increases the administrative burden and ignores the principles of the internal market and free movement of goods and capital. In light of this, from an internal market perspective, there should be an option to have a guarantee in one Member State that would apply to all other Member States.
On the new definitions introduced by the Commission with regard to a ‘certified consignor’ and ‘certified consignee’, these should be further clarified by adding “for commercial purpose” to avoid any potential interpretation inconsistencies in relation to other movement regulations applying to duty-paid goods.
Moreover, CECCM would suggest maintaining the original terminology “holding” used by the Commission, instead of the new wording “processing and storage”, as this will restrict the scope of entities engaging in illegal activities that tax authorities will be able to pursue (as, most frequently the criminal activities are based on informal, non-legalized arrangements) by setting a “higher standard” for them – tax authorities would need to prove that the persons engaged in criminal activities were processing the goods or storing them not only holding them or transporting them.
1 CECCM represents the common views of major European–based cigarette manufacturers such as British American Tobacco (BAT), Imperial Brands (IMB), and Japan Tobacco International (JTI).
On excise refund, CECCM considers that mutual recognition of tax stamps destruction by government officials should be promoted at EU level to reduce the administrative burden for economic operators. Refund procedure should exist for excise goods which are returned / withdrawn from the market after their release for consumption due to quality issues. Importantly, tax stamps that have not been used in production should not trigger excise liability given that the excise goods have not been released for consumption.
CECCM suggests enabling economic operators to correct common typing errors before the movement ends and after the unique administrative reference code has been assigned, thus allowing electronic documents to be amended under supervision of the customs authorities, before the movement give rise to irregularities and unjustified duties. Additionally, in the case the economic operator is able to provide sufficient evidence that goods under duty suspension subject to an irregularity during the movement are held in the tax warehouse, or have left the territory of the Union, excise duties should not be levied. Both suggestions will reduce the administrative burden of economic operators.
Last but not least on the interactions between excise and customs, movements of excise goods to and from special fiscal territories should be facilitated, as according to the Directive they should be considered “exports” for excise purposes and the provisions related to export should apply mutatis mutandis. In practice, using the export procedures for excise goods means that the electronic administrative document would be always closed or confirmed in the Member State of dispatch, based on the confirmation of exit for export purposes. The customs documents would also reflect the EMCS documents for excise goods enabling control during the movement within the territory of the Union.
In annex, you will find a list of detailed amendments, reflecting our above-mentioned comments, for your information.
We express our availability to fully cooperate with all the stakeholders involved in the process of the recast of the Council Directive 2008/118/EC and kindly invite you to contact us should you need any further information.
CECCM’s official response to the European Commission’s consultation on excise duties applied to manufactured tobacco and the possible taxation of novel products.
Official Contribution CECCM PC Excise 29.08.18
CECCM ANNEX Public Consultation Excise 27.08.18
THE CUSTOMS CLASSIFICATION OF TOBACCO HEATING PRODUCT CONSUMABLES AND THE CHEMICAL PREPARATIONS USED IN ENDS IN THE WCO’S HARMONIZED SYSTEM TARIFF NOMENCLATURE
Please find attached a CECCM paper, prepared in advnace of the Harmonized System Committee’s (HSC) 62nd Session meeting on 17th – 28th September 2018 to discuss the customs classification in the Harmonized System (HS) nomenclature for implementation in 2022 of:
a. tobacco used with Tobacco Heating Products (THPs); and
b. the chemical preparations used for e-cigarettes or electronic nicotine delivery systems (often called ‘e-liquids’).
The HSC has been invited to discuss the following four proposals on “Possible amendments to the nomenclature to create a new heading for nicotine products and novel tobacco products”:
CECCM opinion on WCO HSC-RSC options 23.08.18
CECCM position paper on the recast of the Council Directive 2008/118/EC concerning the general arrangements for excise duty
CECCM’s position reflects the views of its member companies, namely British American Tobacco (BAT), Japan Tobacco International (JTI) and Imperial Brands (IMB).
CECCM welcomes the proposal for the recast of the Council Directive 2008/118/EC concerning the general arrangements for excise duty (hereinafter referred to as “Horizontal Directive”) made by the Commission, starting with the alignment between the terminology used by the Excise Directive and the Union Customs Code (UCC) as well as the solutions put forward to further harmonize excise and customs procedures (both on the import and export sides) among which:
• Automated interface between EMCS (Excise Movement and Control System) and AES (Automated Export System);
• Automated data cross-check between electronic excise and customs systems;
• Common list of alternative proofs of exit;
• Common requirements for duty exemptions at import.
On excise and customs interactions topic, we concur with Commission’s view that export followed by external transit should be allowed for excise goods.
Interactions between excise and customs could also be covering deliveries of excise goods to special fiscal territories (e.g. Canary Islands), which are considered part of the customs territory of the EU, but which are currently not in scope of the Horizontal Directive.
On duty paid Business to Business procedures, CECCM welcomes the extension of EMCS to cover cross border duty paid movements.
About exceptional situations such as shortages, excesses, rejections or interruptions, CECCM regrets the Commission’s decision not to suggest a common approach in the proposal, but to leave this to a delegated act. If this would remain the case, CECCM believes the delegated act should be proportionate and designed in consultation with relevant stakeholders.
Furthermore, with regards to the right to be heard for economic operators, CECCM also regrets no harmonized approach has been proposed. However, CECCM supports the usage of EMCS data as input to recovery instruments.
Together with its members, CECCM considers that the revised Directive 2008/118/EC should contain new provisions that would allow the Member State of dispatch to reimburse or remit excise where there is evidence that the relevant goods, involved in a discrepancy, are held in an excise warehouse in the Member State of destination or have left the territory of the European Union.
Regarding guarantees, CECCM believes that the EU Commission has missed the opportunity to improve and simplify the legal framework, more precisely to allow for alternative instruments in lieu of traditional means of guarantees (e.g. promissory note) and for taking into consideration the internal market aspects (e.g. by ensuring mutual recognition of guarantees to be provided by a financial institution in any EU country).
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Also, in case guarantees are required for tax stamps, tolerance should be permitted allowing tax stamps to exceed the guarantee.
Finally, on excise refund, CECCM considers that mutual recognition of tax stamps destruction by government officials should be promoted at EU level to reduce the administrative burden for economic operators. Refund procedure should exist for excise goods which are returned / withdrawn from the market after their release for consumption due to quality issues. Importantly, tax stamps that have not been used in production should not trigger excise liability given that the excise goods have not been released for consumption.
Last but not least, CECCM would welcome a specific clause in the revised Directive on a refund procedure for excise goods in case those goods are withdrawn (or returned) from the market after having been released for consumption.
We are looking forward to a continued fruitful collaboration and in the meantime, we remain at your disposal for any further clarification you may need.
BACKGROUND AND SUMMARY
• Australia’s Department of Immigration and Border Protection (Australia) has submitted a proposal to the Harmonized System Review Sub-Committee (RSC) of the World Customs Organization (WCO). Australia proposes amendments to Chapter 24 of the Harmonized Commodity Description
and Coding System (HS System), which currently consists of headings and sub-headings for the classification of “Tobacco and manufactured tobacco substitutes.”
• Australia proposes to amend Chapter 24 of the HS to create a new heading for inter alia chemicals that are tobacco-free, such as liquid solutions, with or without nicotine, for use with electronic nicotine delivery systems (ENDS).
• Chemical solutions for use with ENDS – i.e. so-called e-liquids – are chemical mixtures that generally contain nicotine1, propylene glycol, glycerin water, and soluble flavorings. As such, they are, and have consistently been, classified under Chapter 38 of the HS (Miscellaneous chemical products). This has been confirmed by classification opinions issued by the WCO and adopted by the Contracting Parties to the HS Convention, including the EU and the United States.
• Yet, Australia proposes to amend Chapter 24 of the HS to create a new heading for, inter alia, tobacco-free e-liquids.
• For the reasons explained in greater detail below, CECCM (Confederation of European Community Cigarette Manufacturers)2 do not support the creation of new headings under Chapter 24 of the HS for the classification of tobacco-free chemicals, such as e-liquids.
CHAPTER 24 OF THE HS SHOULD NOT BE AMENDED TO INCLUDE CHEMICALS
• E-liquids should continue to be classified under Chapter 38 of the HS nomenclature. For customs classification, two criteria must be considered. First, the essential physical characteristics of the product. Second, in some cases, their intended use. The composition and intended use of e-liquids render them significantly different to products currently classified in Chapter 24 of the HS (“Tobacco and manufactured tobacco substitutes”). In particular, e-liquids do not contain tobacco
and there is no combustion involved in their use. Since e-liquids are chemical solutions that do not contain tobacco, they must continue to be classified in HS Chapter 38 (“Miscellaneous chemical products”).
• The above approach is consistent with the practice of officials responsible for tariff classification issues. At its 48th Session in September 2011, the Harmonized System Committee (HSC) of the WCO adopted a classification opinion in which it decided that, due to their composition and use, cartridges for electronic cigarettes, “whether or not containing nicotine, could not be regarded as tobacco substitutes.”
• In addition, in November 2016, the EU’s Customs Code Committee agreed, with no dissenting voices, that cartridges and refills for so-called Electronic Nicotine Delivery Systems (ENDS) should be classified in Chapter 38 of the HS, and the devices for their use should be classified in Chapter 85 of the HS.
• In the United States, the Committee for Statistical Annotation of Tariff Schedules—comprising representatives from USITC, U.S. Customs and Border Protection (CBP), and the U.S. Census Bureau (Census) – established six new statistical reporting numbers for e-cigarette devices, parts, and liquid in the Harmonized Tariff Schedule of the United States. These reporting numbers took effect in 2016. The reporting numbers for e-cigarette devices and parts are placed under Chapter
85, while the reporting numbers for liquids are placed under Chapter 38.
• The inclusion of chemical solutions under the same Chapter of the HS system as tobacco containing products would lead to an obvious lack of physical commonality among these diverse products. Yet it is a well-established principle that classification under the HS nomenclature must clearly reflect the physical properties of a product.
THE OBJECTIVES OF THE HS NOMENCLATURE CAN BE MET IN FULL IF E-LIQUIDS CONTINUE TO BE CLASSIFIED UNDER HS CHAPTER 38
• The three main objectives of the HS are to: (i) facilitate international trade; (ii) facilitate the collection, comparison and analysis of international trade statistics; and (iii) promote the standardization of trade documentation and the transmission of data. Shifting the classification of e-liquids from Chapter 38 of the HS to Chapter 24 of the HS would not improve the ability of customs authorities to achieve any of these objectives.
• According to Australia, its proposal is motivated by a desire to “enable data collection on the trade” of nicotine products for human consumption. However, if Contracting Parties to the HS Convention are interested in improving the collection of statistics on the international trade of e-liquids, they can consider amending Chapter 38 of the HS system to create a new six-digit subheading specifically for e-liquids. Alternatively, individual countries can already achieve this objective
nationally and in full by creating new 8 or 10 digit subheadings in their national nomenclatures under existing HS code 3824.99. We note in this regard that the United States, for example, has specific 10 digit sub-headings for “e-cigarette liquid that contains 5 percent or more by weight of nicotine” (3824.90.2840) or “less than 5 percent by weight of nicotine” (3824.90.9280). Other WCO members could certainly adopt a similar approach.
CONCLUSION
• For the above reasons, CECCM (Confederation of European Community Cigarette Manufacturers) representing the common views of major European–based cigarette manufacturers such as British American Tobacco (BAT), Imperial Brands, and Japan Tobacco International (JTI) as well as 13 national Manufacturers’ Associations, do not support the creation of new headings under Chapter 24 of the HS for the classification of tobacco-free chemicals, such as e-liquids.
