The European Council is negotiating a revised Tobacco Excise Directive proposed by the European Commission that would further raise minimum cigarette taxes and bring vapes, nicotine pouches, and heated tobacco under similar tax treatment.
A Financial Times investigation published last week shows what that price gap has done. Reporters found that organized crime groups are now manufacturing counterfeit cigarettes inside the EU itself, rather than smuggling them across its borders. One supply chain traced back to a warehouse in the Belgian town of Fleurus, where nine men were living behind packing machines that produced fake Marlboros, later sold at Brussels' Anderlecht market for 2.50€ a pack. The number of these factories uncovered across Europe has risen almost 80% since 2018, from 47 to 83.
Europol's Giuseppe Lopez told the FT that rising tobacco taxes in high-price markets such as France and Belgium made local manufacturing much more profitable.
The mechanism is very simple. When a pack of cigarettes costs 13€, as it now does in France after a decade of steep tax rises, and a counterfeit one costs 2.50€, a larger share of price-sensitive smokers will switch to the black market alternative. That gap guarantees that when someone spends an estimated €1.4 million building a counterfeit cigarette factory, he will find demand sufficient to recoup his investment. A single container of counterfeit packs sold at that price is enough to cover that cost within two weeks. The result is already visible in France: almost one in five cigarettes smoked there last year was counterfeit.