While the price of cigarettes will dramatically increase in Germany, cigars and pipe tobacco will be subject to much less dramatic tax increases than had been warned for 2027.
Throughout the year, Germany’s government has been working on a major update to its tobacco taxes, with a series of increases planned between 2027 and 2030. According to Bild, Germany’s ruling CDU/CSU parties have agreed to a modified version of the massive tobacco tax proposal that was introduced over the summer.
For cigars, the ad valorem tax rate will increase from 1.74 percent of the retail price to 3.83 percent. Previously, the proposed increase was 21.05 percent, a 14-fold increase.
Per a source, by 2030, the specific duty, currently 1.4 cents, will rise to 2.85 cents. The minimum tax excluding VAT, currently 7.504 cents, will rise to 13.96 cents.
It’s unclear what changes might exist to the specific duty and minimum tax rates, though those proposed increases were much lower than the ad valorem change, which the German cigar industry argued would decimate the country’s cigar sector.
Pipe tobacco taxes will jump from €26 per kilo to €71.50 per kilo, still half of the proposed €172 rate.
Cigarettes, on the other hand, are expected to face an even steeper price increase due to new taxes. The belief was that in 2027, cigarettes could still be found for less than €9 per pack, but Bild is reporting it’s expected to be at least €9.10, 33 cents more than expected. Previous proposals called for cigarettes to rise to at least €11.78 per pack by 2030.
Germany is one of the most important cigar markets. Due to its lower taxes, transparent pricing and open market, the country is a leading market for both Cuban and non-Cuban cigars. In 2024, Habanos S.A. described Germany as its fifth largest market; for many non-Cuban cigar companies, it is a top three market outside of the U.S.
While today’s news is a major win for the cigar industry, it is not final. The proposal will still need to be debated in the Bundestag and formally approved before it becomes law. A finalized bill is expected later next week.
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