Ref. Ares(2020)771574 - 06/02/2020
ВИ Ref. Ares(2019)1272200 - 25/02/2019
To:
(TAXUD);
(TAXUD)
Cc:
(TAXUD); TAXUD UNIT C2
Subject:
Meeting report ESTA February 12 2019
Meeting with ESTA, February 12, 2019:
The meeting was requested last November by ESTA to present the findings of the London Economics
Study on the taxation structure for fine-cut tobacco, which ESTA commissioned in 2018.
Participants:
ESTA:
EC Taxud C2:
Main issues presented by ESTA :.
•
ESTA presentation
The European Smoking Tobacco Association (ESTA), represents mainly smoking tobacco SMEs and mid-
sized companies (and also three large tobacco companies) producing fine cut tobacco (FCT)
The EU market for fine cut tobacco market varies widely across the EU with very different usage (and
sales) between Member States.
•
The"buffer" function role of fine cut tobacco
ESTA insisted on the buffer function of fine cut tobacco: FCT could act as an alternative to illicit
cigarettes
Consumers who would be priced out of the market by high prices for cigarettes would consume FCT
instead
FCT therefore acts as a buffer between domestic cigarettes and cross border or illicit cigarettes.
•
Differentiated tax treatment
ESTA insisted that the tax differential between cigarettes and FCT should remain
Affordability is the main criteria for consumers and not respecting the current differential would push
those consumers to illicit products
•
The London Economics Study
This is the second report on FCT. A third is under preparation. All commissioned by ESTA The report
briefly presents the characteristics of FCT consumption and the buffer function It then provides for case
studies of 4 national markets (BE, DE, NL, UK) where taxation regime for FCT had been modified and the
resulting impacts on illicit trade.
•
Raw tobacco:
ESTA indicated that there was an issue with illicit trade of raw tobacco but were unable to provide any
data on the issue
All imported raw tobacco into the EU comes via TabakNatie, the large warehouse facility in the port of
Antwerp
ESTA noted that it didn't favour the notion of 'illicit bulk' or 'illicit cut' tobacco as used in some studies,
notably by CrimeTec
Definition of smoking tobacco: ESTA noted the alleged confusion in DE and SE after the CJEU judgement
on Eko Tabak.
Directive 2011/64/EU on the structure and rates of excise duty applied to manufactured tobacco :
We took note of ESTA positions on a possible review of the rates as regards fine cut tobacco, notably on
maintaining the current 'tax gap'
We indicated that we had taken note of ESTA submission to the OPC and the report by London
Economics
We provided for a clarification of the timing of the external study and the evaluation of the Directive.