Black market trade in illegal cigarettes costing billions in lost taxes – report

Europe’s nicotine bans are fuelling the illegal market, according to newly-published research just released.

It states that the consumption of illegal e-cigarettes is growing almost 2½ times faster than Europe’s legal market.

This is according to new research launched in Brussels by Euromonitor International, the market intelligence firm.

It argues that:

• The black market is outpacing the legal market
• Restrictions fuel the black market
• Restricting legal sales doesn’t end demand but, rather, redirects buyers online and across borders

The exhaustive report says that black market sales rose by a third in only two years across 24 of the 27 Member States, from 2.6 million litres in 2023 to 3.5 million litres in 2025, equivalent to around 1.8 billion e-cigarettes.

Speaking at an event in Brussels where the report was launched, Fabio de Petris, Vice President for EU External Affairs at British American Tobacco (BAT), said the research “shows that vape bans don’t work – they hand the market to criminals, where there are no age checks, product safeguards, or taxes paid.”

He added, “Black market cigarettes already cost EU governments €13 billion a year in lost taxes.Now there’s a growing problem with illegal e-cigarettes sales, which are up by a third in only two years, and we’re now seeing the same trends emerge with nicotine pouches.

“The EU should learn from the evidence in the new report. It needs to implement smarter, targeted regulation that keeps control where it belongs – with governments, not criminals.”

The research is timely as it comes as the European Commission finalises its proposal for a new Tobacco Products Directive (TPD), with campaigners saying the “evidence points the same way: when legal products are subject to extreme restrictions or bans, the black market takes over.”

Euromonitor, in its report, said that product bans result in consumers turning to illegal products. In contrast, countries with targeted, risk-proportionate regulations have a smaller illegal market and greater controls to prevent underage access to vaping products, it goes on to state.

The black market is, it says, growing 22.5% a year against 3.0% for legal, more than seven times faster, including after the January 2025 disposables ban. More than one in three disposable inspections found infringements (469 of 1,270), and authorities removed over 63,000 devices, according to the report.

The difference between country experiences is, it says, “striking.”

It says that in Belgium, which bans disposable vapes and online sales, the black market is now five times the size of the legal one by volume, and grew more than 20% a year between 2023 – 2025.

The report states that in The Netherlands, which allows only tobacco flavoured vapes, legal sales fell by around 10% a year, “while the illicit market kept growing following the ban, and is now roughly the same size as the legal market.”

It says that in the Netherlands, legal volume fell 10.3% a year between 2023-2023 while black market volume grew 5.8%, and the two

markets are now roughly the same size (48.8%).

The Euromonitor International research goes on to say that in Czechia and Sweden, which it says have introduced “targeted, risk-proportionate regulations” to address national issues, “the vast majority of demand stays in legal, taxed and age controlled channels.”

Their black-market shares are 3.3% and 14.4%.

It is “clear,” according to the report, “that product safety standards, age verification controls and tax controls deliver the most when vape sales stay in legal channels that the authorities can control, track and enforce.”

The new finding follows increasing seizures by European law enforcement authorities relating to the black market in e-cigarettes and nicotine pouches,  as well as warnings regarding the involvement of criminal networks.

 The European Anti-Fraud Office (OLAF) has recently warned that “the illicit trade in tobacco and e-cigarettes is a serious and growing threat to public health and public finances”.

The Euromonitor International report, “Impact assessment of different EU Member State approaches to e-cigarette regulation: Consequences for market integrity and illicit trade”, was commissioned by British American Tobacco (BAT), a leading global consumer goods company whose portfolio spans cigarettes and a range of smokeless alternatives, including vapour, heated products and oral nicotine pouches.

The research was presented at an event organised by BAT in collaboration with Euromonitor International at the Bibliothèque Solvay in Brussels, followed by a panel discussion with enforcement experts including Evaggelia Panagopoulou, head of the Anti-Smuggling and Organised Crime Department for Greek Customs; Magg. Luigi Nacca, Commander of the Guardia di Finanza’s Central Service for Combating Organised Crime in Italy; Felix Schirner, BDZ Customs and Fiscal Union in Germany and Kristýna Richter, Nefejkuj Project in Czechia.

The Euromonitor International paper covers 24 EU Member States – excluding Cyprus, Malta and Luxembourg – and compares four case studies: Belgium, the Netherlands, the Czech Republic and Sweden.

The European Court of Auditors estimates that EU Member States are losing €13 billion annually in tax revenues due to the black market in tobacco while, in its first-ever joint customs operation targeting e-cigarettes and heated tobacco, OLAF and authorities from 30 countries seized more than 94 million items in a single month. OLAF helped dismantle the first major counterfeit pouch factory in Lithuania in August 2026. Authorities seized more than 330,000 boxes of nicotine pouches.

A European Commission spokesman accepts that the illicit trade in tobacco products “undermines public health, deprives Member States of significant tax revenue and is often linked to organised crime.”

The spokesman said, “Overall, illicit tobacco trade is estimated to cost the EU around €13 billion each year in lost tax revenue. This underscores the importance of continuing to strengthen the current control of the tobacco supply chain.

“Therefore, in 2025, the Commission proposed bringing raw tobacco within the scope of the EU tobacco taxation framework, including extending the Excise Movement and Control System (EMCS) to raw tobacco. This would help Member States better detect and combat illicit trade. The negotiations in Council are ongoing. We will continue supporting the Council Presidency to find a good agreement on the Tobacco Taxation Directive swiftly.Tackling illicit tobacco trade requires strong enforcement, cross-border cooperation and a robust EU regulatory framework. The Commission supports Member States through customs cooperation, monitoring measures and rules governing excise goods.”