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Tax Gap of Heated Tobacco Products in France
In France, excise taxes applied on tobacco products are defined by the Tax Code on Goods and Services (Code des impositions des biens et services or CIBS) article L.314-24 al. 1, and by the decision of November 10th, 2021, that redefined the increments on the minimum excise tax for tobacco products, effective January 1st, 2022. On December 23rd, 2022, the government approved a major change to the tobacco tax system as part of the Social Security Financing Law of 2023, under the Bill n. 2022-1616 of December 23rd, 2022-art. 15 (V). In addition to increases in tobacco taxes, the new law introduced a tax on heated tobacco products, with the goal of bringing the tax rate closer to that of cigarettes. The tax system for cigarettes and heated tobacco products consists of a mixed excise tax that includes a specific tax based on sticks, an ad valorem tax based on the retail value, and a minimum specific tax rate based on sticks. Prior to 2023, heated tobacco tax by default as an existing tobacco category (generally pipe tobacco), which is a specific tax based on weight.
Period March 1st, 2023 – December 31st, 2023:
- Heated tobacco sticks: Specific tax of EUR 19.3 per 1000 sticks and ad valorem of 51.4% of the retail value, with a minimum tax of EUR 232 per 1000 sticks
- Cigarettes: Specific tax of EUR 68.1 per 1000 cigarettes and ad valorem of 55% of the retail value, with a minimum excise of EUR 360.6 per 1000 cigarettes
- Other heated tobacco: Specific tax of EUR 19.3 per 1000 sticks and ad valorem of 51.4% of the retail value, with a minimum tax of EUR 232 per 1000 sticks
- Other smoking tobacco (e.g., pipe tobacco) or other heated tobacco used for inhaling: Specific tax of EUR 33.6 per kg and ad valorem of 51.4% of the retail value, with a minimum excise of EUR 145.1 per kg
- Fine cut tobacco: Specific tax of EUR 91.7 per kg and ad valorem of 49.1% of the retail value, with a minimum tax of EUR 335.3 per kg
- Chewing tobacco: Ad valorem tax of 58.1% of the retail value
- Snuff tobacco: Ad valorem tax of 36.9% of the retail value
According to December 2022 Law Art L. 314-15-1. The category “heated tobacco sticks” includes products that meet all the following criteria:
- They are intended for inhaling after being heated by users without being burned;
- They are not intended to be prepared with a waterpipe;
- They are sold in the form of tobacco sticks that do not exceed a length of 45 millimeters including filter; their depth (thickness) should not exceed 7 millimeters; and the weight of the substances mentioned in 1° et 2° should not exceed 265 milligrams.
The Category “Other heated tobacco” includes products that meet criteria 1 and 2 but not criteria 3° of Law Art L. 314-15-1.
Sources:
- LOI n°2022-1616 du 23 décembre 2022 – art. 15 (V)
- French Customs
- Fiscal Code for Goods and Services
- Loi de Financement de la Securite Sociale (Social Security Financing Law)
Last updated Sept. 1, 2023