Rise in Cigarette Taxation in Germany Marks First Increase Since 2019

In a notable shift, Germany has witnessed an increase in the taxation of cigarettes for the first time since 2019, according to data released by the Federal Statistical Office. In 2024, a total of 66.2 billion cigarettes were registered for taxation purposes, reflecting a rise of 3.5 percent, or 2.2 billion cigarettes, compared to the previous year.

Additionally, the amount of taxed fine-cut tobacco rose by 6.7 percent to reach 25,152 tons. The sales figures for cigars and cigarillos also saw a slight increase of 0.2 percent, totaling 2.3 billion units.

This growth in cigarette sales and fine-cut tobacco is largely attributed to a preemptive purchasing behavior as retailers prepared for an impending increase in tobacco taxes set to take effect on January 1, 2025. Producers ordered new tax stamps for products slated for sale in the upcoming year, leading to the observed uptick in figures.

Despite this short-term increase, long-term trends indicate a significant decline in cigarette consumption in Germany. Since 1991, the total number of cigarettes sold has dropped by more than half, from 146.5 billion to 66.2 billion in 2024. On average, each person in Germany smoked 784 cigarettes last year, a stark contrast to the 1,831 cigarettes consumed per capita in 1991.

Jan Mücke, the managing director of the Federal Association of Tobacco Products and Novel Alternatives (BVTE), emphasized that the long-term decline in the tobacco market remains unchanged despite the latest figures. He noted that these statistics should not be interpreted as an increase in smoking prevalence or consumer rates, particularly since a significant portion of cigarette purchases occurs at borders, especially with smokers buying from countries like Poland. Currently, it is estimated that approximately one in five cigarettes consumed in Germany goes untaxed.

The taxation framework for various tobacco products has been subject to incremental changes over the years. For instance, a new tax rate for water pipe tobacco and heated tobacco was introduced on January 1, 2022, following a previous classification that taxed them at lower rates like pipe tobacco. E-liquid products for e-cigarettes began incurring taxes starting July 1, 2022, further diversifying the taxation landscape.

In 2024, sales of water pipe tobacco surged dramatically, increasing by 75 percent to reach 1,274 tons. This spike can also be linked to regulatory changes that lifted previous restrictions on package sizes, allowing all sizes to be sold once again starting July 1, 2024. Conversely, traditional pipe tobacco sales experienced a decline, falling to 314 tons, a decrease of over 21 percent from the previous year.

Furthermore, the sales of taxed substitutes for tobacco goods, such as liquids for e-cigarettes and vaporizers, increased by 3.5 percent in 2024, reaching 1.3 million liters. This reflects a growing trend in alternative tobacco use amidst changing consumer preferences.