Vape excise tax – new opportunities for smugglers
CSNA and Hale vaping have alerted the Department of Finance and Revenue to the need to have an Irish tax stamp affixed to these products to allow for easy identification of products that have not all taxes paid on them
Print4 April 2025
Details of the excise on vaping products were revealed in the 2025 Budget, 50c per ml plus VAT.
This means that a 2ml container will have an increased €1.23 sales price when excises are levied, and an even greater increase can be expected for re-chargeables which hold 10ml and will cost incl. VAT a significant €6.15 more than the current RSP.
All excisable products are subject to smuggling, this new category will be no different.
The Convenience Stores & Newsagents Association (CSNA) and Hale vaping have alerted the Department of Finance and Revenue to the need to have an Irish tax stamp affixed to these products to allow for easy identification of products that have not all taxes paid on them.
CSNA, noted: ‘We do not need to remind any of you just how devastating smuggling and duty free has been to legitimate tobacco sales in our stores, by Revenue and HSE annual surveys we know that 34% of all tobacco consumed in Ireland did not contribute to the Irish Exchequer or for that matter to our retail sales.’
The following findings have been provided to us from Hale
- Retailers would face added burdens under a self-declaration system.
- Report shows a potential €80 million loss of revenue to the state.
- A tax-stamp system would likely generate more revenue from e-liquid taxation.
- Enforcing a self-declaration system is challenging.
- A self-declaration system may encourage illegal activity.
- A RED C poll (Jan 2025) found up to 49% of consumers might turn to the black/grey market if an e-liquid tax is introduced.
- A tax-stamp system would help ensure regulatory compliance.
- Italy’s switch from self-declaration to a tax-stamp system reduced black/grey market from ~80% to ~5%.
- Other countries like Belgium, Poland, Portugal, and Germany also use tax stamps.
- Several EU countries use tax stamps despite e-liquids not being harmonized excise products, countering Ireland’s reasoning for not adopting them.
- Germany requires firms to buy tax stamps and pay excise upfront, whereas Italy taxes products only when leaving the warehouse.
- Gradually increasing tax rates may be more effective than a sudden hike. Past data shows higher revenue was collected when tax rates were adjusted over time rather than imposed at once.
- The Irish e-liquid market is substantial, with ~84 million units or 380.2 million ml sold annually (legal + black/grey market). Investigations found that 80% of locations visited sold non-compliant vapes, highlighting significant black/grey market activity even without an excise tax. Authorities seized 26.6 tonnes of illegal vape products at the border.
- Potential tax revenue:
– €73.7 million –€149.9 million with no disposables ban.
– €46.5 million–€132.4 million with a disposables ban. - The Department of Finance estimated just €17 million, which may be underestimated based on market size and price elasticity. A tax stamp system could yield substantial returns.
- Ireland’s proposed tax is significantly higher than in the UK and other EU countries, creating cross-border price concerns and higher chances of black market.
Read more: Government to introduce stricter regulations on vapes
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