Implementation of the tax on e-liquids in Spain
On January 31, the Order approving taxes on vaping liquids for electronic cigarettes and other tobacco-related products was published in the Boletín Oficial del Estado (BOE). This tax will take effect on April 1, 2025, and applies to the entire Spanish territory, except for the Canary Islands, Ceuta, and Melilla.
This new tax will be applied as follows:
- E-liquids with up to 15 mg/ml of nicotine or without nicotine: 0.15 euros per milliliter.
- E-liquids with more than 15 mg/ml of nicotine: 0.20 euros per milliliter.
For example, a 10 ml container with 10 mg/ml of nicotine will have a tax of 1.50 euros, while a similar container with 20 mg/ml of nicotine will be taxed at 2 euros. It’s important to note that this tax is added to the base price of the product and the corresponding VAT, resulting in a higher price for the consumer.
How does this tax affect consumers and vape shops?
Users will notice a price increase for vaping liquids, similar to what happened with tobacco in the past; and this rise could make some people reconsider their consumption habits. Whether the product contains nicotine or not, the tax will apply to all e-liquids used for vaping. This increase will range from 1.5 to 2 euros, depending on the nicotine level, and will affect 10 ml bottles, which are the most sold.
For shops and distributors: more bureaucracy and extra costs
While consumers will be affected, this tax will hit agents in the Spanish vaping industry even harder:
- Companies selling e-liquids will need to submit a monthly tax declaration using a special form (model 573). This means more paperwork and fiscal control.
- Any business selling vaping liquids will have to register in a special taxpayer registry, following additional administrative procedures.
- If a company exports e-liquids to other countries in the European Union, it can request a tax refund through another form (model A24).
Producers, distributors, and retailers, who are all involved in the supply chain, will face challenges in operational costs and possible reductions in demand for these products. Let’s analyze in depth what repercussions this could have for the sector:
- Increase in production and distribution costs
- Change in consumption habits: The rising cost of these products could lead consumers to return to traditional tobacco or seek alternatives in the black market.
- Reduction of profit margins for small and medium-sized enterprises: As usual, small fish are the ones that suffer the most in these situations. Many specialized vape shops might be seriously affected as they rely solely on these products.
- Proliferation of the black market: One of the most concerning possible consequences is that consumers might resort to unregulated e-liquids of dubious origin.
Why is a new regulation being applied to vaping liquids?
Many wonder about the reasons behind the Spanish Government’s motivation to regulate the vaping sector, an industry that has not stopped growing in recent years.
It seems that the application of new taxes isn’t an isolated measure, but rather part of a broader plan that also considers prohibiting all flavors in e-liquids except for tobacco flavor, for instance.
To better understand the context of this new tax, we need to analyze different factors:
Reducing consumption among young people
The Ministry of Health has expressed concern over the increase in vaping among younger people. Apparently, the “candy” flavors that some e-liquid brands produce might be an attractive gateway to nicotine consumption.
This fact is shocking for e-liquid producers, as these products are only marketed to people over 18.
Pressure from international organizations and other EU countries
This vaping regulation in Spain aligns with recommendations from the World Health Organization (WHO) and the European Union (EU). The WHO has insisted on the need for stricter vaping restrictions to prevent it from becoming an “attractive” alternative to conventional tobacco.
Fiscal revenue
Besides the intent to protect public health, another motivation behind the new taxes on vaping liquids could be to increase fiscal revenue in this emerging industry. With a significant loss of income in recent years from the tax on traditional tobacco consumption, introducing this tax would create a new and significant source of state revenue while establishing a fiscal framework and regulating the distribution of these products.
Lobbying from the tobacco industry and tobacconists?
Another factor to consider is the pressure exerted by the traditional tobacco sector. The Spanish Tobacconists’ Union has repeatedly expressed that vaping liquids should be regulated similarly to tobacco, arguing that the rising trend of vaping in Spain has significantly reduced their revenue, creating a parallel market that doesn’t have the same tax burden.
Conclusions
As mentioned above, the new taxes will apply to both nicotine-containing and nicotine-free vaping liquids, which has caused controversy within the sector – if the Government’s intention is to prevent vaping from being a gateway to nicotine for teenagers, it wouldn’t make sense to also increase the price of nicotine-free e-liquids.
This new measure in Spain responds to various factors: public health protection (especially for young people), the need to increase fiscal revenue to compensate for the decline in traditional tobacco use, and pressure from tobacconists and other industry players. However, while this price increase might discourage young people from consuming these products, it remains to be seen whether it will effectively reduce consumption, or, on the contrary, strengthen the black market, or lead consumers back to traditional tobacco.
In countries where similar regulations have been applied, an increase in tobacco consumption has been observed. It’s essential to note that vaping is about 95% healthier than smoking, and thousands of tobacco consumers have managed to quit this bad habit thanks to vaping.
Vaping associations and shops, and e-liquid consumers have protested against this regulation in recent months, arguing mainly that such regulations against vaping only push people back to tobacco consumption.
At Cali Terpenes, we believe that a more balanced approach, greater consumer education with risk reduction campaigns, and stricter access control measures for young people would be more effective actions.
What do you think? Leave your comment and share your thoughts with the community!
Cali Terpenes
