Tobacco Tax on Cigars – How High Is It in Germany, and How Is It Calculated?
Like all other types of tobacco, cigars are subject to a tobacco tax. In Germany, the tobacco tax is primarily based on the German Tobacco Tax Act and EU framework guidelines. We provide an overview of the current minimum tax rate and how the tax rate is derived.
Current Tax Rates (for Tobacco Tax in Germany)
In Germany (as in all EU countries), the tobacco tax is calculated based on quantity or, in the case of fine-cut and pipe tobacco, by weight combined with the recommended retail price (RRP). The RRP refers to the price consumers pay at retail. The tobacco tax is calculated as a percentage of the RRP, with the tax rate varying depending on the type of tobacco.
These are the currently applicable tax rates in Germany and the resulting minimum tax:
| Type of Tobacco | Tax Rate | Minimum Tax |
| Cigarettes | 11 cents per piece plus 19.84% of the RRP | 22.89 cents per piece minus VAT on the RRP |
| Fine-Cut Tobacco | 54.39 euros per kg plus 17% of the RRP | 111.78 euros per kg minus VAT on the RRP |
| Cigars and Cigarillos | 1.4 cents per piece plus 1.47% of the RRP | 7.5 cents per piece minus VAT on the RRP |
| Pipe Tobacco | 15.66 euros per kg plus 13.13% of the RRP | 26 euros per kg |
VAT = Value-Added Tax
Source: Wikipedia
The framework for tax rates in Germany and across Europe is provided by Directive 2011/64/EU, which shapes both the tobacco tax and the German Tobacco Tax Act. The directive’s goal is to establish uniform regulations and roughly equal pricing for tobacco taxation within the EU. Consequently, tobacco products are similarly structured for tax purposes throughout Europe.
Calculation Example for a Cigar
The retail price of a cigar is composed as follows:
- the specific excise tax (1.4 cents per piece),
- the so-called ad valorem excise tax (1.47% of the RRP), and
- the value-added tax (VAT) of 19%.
If we assume an RRP of 10.00 euros for the cigar, the tax rate is calculated as follows:
Price without taxes: 8.289 euros
- Excise Tax – Specific: 1.4 cents per piece amounts to 0.014 euros for one cigar
- Excise Tax – Ad Valorem: 1.47% of the RRP amounts to 0.122 euros for one cigar
Total Excise Taxes: 0.136 euros (0.014 euros + 0.122 euros)
= Price (excluding VAT): 8.425 euros
- 19% VAT: 1.575 euros
= Retail Price: 10.00 euros
Calculation Example for a Tin of Pipe Tobacco
The retail price of a 100g tin of pipe tobacco is composed as follows:
- the specific excise tax (15.66 euros per kg),
- the ad valorem excise tax (13.13% of the RRP), and
- the value-added tax (VAT) of 19%.
If we assume an RRP of 10.00 euros for the tin (100g), the tax rate is calculated as follows:
Price without taxes: 6.383 euros
- Excise Tax – Specific: 15.66 euros per kg amounts to 1.566 euros for a 100g tin of pipe tobacco
- Excise Tax – Ad Valorem: 13.13% of the RRP amounts to 0.838 euros for a 100g tin of pipe tobacco
Total Excise Taxes: 2.404 euros (1.566 euros + 0.838 euros)
= Price (excluding VAT): 8.787 euros
- 19% VAT: 1.213 euros
= Retail Price: 10.00 euros
Taxation of Cigars Abroad
The taxation of tobacco products is harmonized across all EU member states, meaning it is approximately the same. Thus, the taxation of cigars in Austria is similar to that in Germany.
In Switzerland, taxation varies for different types of tobacco. Unlike Germany, Switzerland does not impose a VAT on tobacco products, but it has a similar excise tax calculated with both a fixed and a value-based component. In other countries, such as the United States, the minimum tax is calculated based on a federal excise tax as well as regional taxes.
Tips for Saving on Cigar Purchases
Although tax structures vary in non-EU countries and cigars may be significantly cheaper, import duties and import VAT must be considered when ordering. Additionally, higher shipping fees should be anticipated.
Worth knowing: When importing cigar and pipe tobacco from abroad, customs authorities frequently report incorrect or missing health warnings on the packaging. In such cases, importation may be completely refused.
If you want to save on cigar purchases, it can often be worthwhile to order domestically above a minimum order value to save on shipping costs. Additionally, buying bundles of cigars instead of boxes can be cheaper, as this saves on materials. In principle, however, cigars in Germany are subject to price fixing, making it difficult to find specific discount offers.
Please note that all information in this article does not constitute legal advice.
