EU Illicit Cigarettes Surge to Highest Level Since 2015 – Huge Tax Variations not Helping

KPMG has released its latest annual study on illicit cigarettes in Europe ¹, commissioned by Philip Morris Products SA, and covering 38 European markets (including 27 EU member states). The study shows that while overall illicit consumption in Europe grew marginally in 2024 (by 0.2%), consumption in the EU27 soared by 10.8% to reach 9.2% of the total market – the highest level in nearly a decade.

According to Philip Morris, this sharp increase was caused by ‘steep and abrupt tax increases, benefitting criminals who supply unregulated, untaxed and inferior products, including counterfeits, at a lower price’.

Although the tobacco industry is often criticised for being too quick to blame illicit trade on rising taxes, it is plain to see from the KPMG study that the countries with the highest levels of illicit trade (ie.

Ireland, Netherlands, France) are also those with the highest cigarette excise rates. Conversely, the countries with the lowest share of illicit trade (such as Spain, Italy and Germany), happen to levy much lower rates.