EU capitals fail to reach a deal on nicotine taxes

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Despite Ireland warning of no “better, brighter day” to resolve the issue, a deal was out of reach. 

November 9, 2026 10:28 pm CET

BRUSSELS — EU finance ministers failed to agree on a watered-down EU tobacco tax law, despite a last-ditch compromise attracting near-unanimous support. 

Finland and Sweden were initially at loggerheads over the minimum tax rate for nicotine pouches at a meeting in Brussels on Monday. But in the end, they settled their dispute with a compromise rate — only for Malta to become the only country holding out against the proposed text.

“We have the agreement of 26,” Irish Finance Minister Simon Harris said after lengthy closed-door talks with the 27 EU country ministers, adding: “Obviously, this is a file that requires unanimity.”

The tobacco tax directive has divided countries for months. Minimum tax rates for nicotine products have been an especially thorny issue, but indexing tax rates with inflation has been another contentious element.

The European Commission proposed increasing levies on cigarettes and setting minimum rates on newer products like vapes, heat-not-burn tobacco and nicotine pouches in July last year.

The tax hikes are designed to wean smokers off cancer-causing tobacco while also preventing younger people from taking up addictive nicotine products, which affect brain development in teens and increase cardiovascular risks.

Harris, who was chairing the talks, said he would bank the “significant progress” made on Monday, adding: “I intend to return to this issue” to get the file over the line.

Inching towards a deal

Taxes on nicotine pouches have been a perennial issue throughout months of talks among finance ministers in the Council of the EU — and ended up being kicked down the road again.

Ireland began negotiations Monday with a proposed €20 per kilogram in the latest compromise. An earlier draft proposed starting with €30 per kilogram and rising to €80 per kilogram by 2032. This was watered down to a target rate of €50 per kilogram, before Monday’s draft cut it to €20 with a final higher rate to be determined later.

It looked like this rate might succeed. Sweden, which had been the holdout over high nicotine pouch duties, agreed to the compromise. But then Finland opposed. Deputy Prime Minister and Finance Minister Riikka Purra regretted that the level of ambition for pouches “has been totally removed.” 

With Malta and Estonia also against the compromise on the basis of indexation measures, Harris suspended the public session to allow for further private negotiations. 

And it nearly worked. Finland and Sweden agreed that nicotine pouches could be brought into the directive, but that the tax rate would be set at a later date, with the Commission presenting a legislative review within a year of the directive coming into force. 

A key indexation provision was also deleted, but Malta still rejected the compromise.

"Unfortunately, for the time being, we cannot support the proposal as is," Clyde Caruana from Malta said after the closed-door meeting, without providing any public explanation.

Malta had previously raised concerns over periodic price increases that would be indexed with inflation. Caruana said pricing would be inflexible, complex and, for Malta, “well above national levels.”

Harris pleaded with colleagues to reach a consensus since without a deal, nicotine products would continue to face no minimum duties or meaningful cross-border limits. 

“We cannot let the perfect be the enemy of the good,” he said. “No deal is the least ambitious outcome and no deal is a victory for the tobacco industry and a danger for young people right across the European Union.”

Harris vowed to use the momentum achieved in a matter of hours to finalize the directive during the Irish presidency, with the Economic and Financial Affairs Council set to meet again in December. 

Earlier, he had failed to hide his disdain ahead of the last-ditch negotiations. “I don't believe there is this better, brighter day over here where we all come back and that this decision gets any easier,” he said. “Without this directive, the rate applied to nicotine pouches is zero euros.”