THE GOVERNMENT IS weighing up the charge it’s set to apply to e-cigarettes in the forthcoming Budget.

In its tax strategy paper on vapes and nicotine cigarettes, it said that the current rates applied by other EU Member States which tax e-liquids range from €0.10 to €0.30 per millilitre of e-liquid in the vape.

The decision on what rate to apply will fall to the new Finance Minister Jack Chambers to decide in October’s Budget.

The paper outlines that there is widespread consensus on the need to update tobacco tax legislation in order to include vapes in the scope for taxation, particularly out of health concerns due to e-cigarettes.

In light of continuing delays to the revision of the Tobacco Products Tax Directive, public health interests and the Programme for Government commitment to tax e-cigarettes and vaping products, it’s intended that a domestic tax on e-cigarette liquids will be legislated for in this year’s Finance Bill.

The previous finance minister Michael McGrath made this promise when delivering last year’s Budget statement.

The Programme for Government committed the government to “bring in a targeted taxation regime to specifically discourage ‘vaping’ and e-cigarettes”.

Currently, VAT is charged on vaping products but they do not have excise duty levied on them like normal cigarettes.

Billed as a healthier alternative to smoking, vaping began to take off in Ireland a decade ago, with e-cigarettes becoming increasingly widely available through standalone shops, convenience stores and petrol stations.

While the industry has long claimed its products are a less harmful way to help people quit smoking, Irish health authorities have for many years advocated a precautionary approach, particularly due to the presence of highly addictive nicotine.

Strategy paper

From an administrative perspective, officials believe a broad tax base is “typically preferred as it reduces tax administration costs” and allows increased revenue to be raised at lower rates.

The paper also notes that there are “difficulties in determining” the level of nicotine that vapes may contain, with officials considering whether it would be “most effective” to apply a tax to all e-liquids regardless of nicotine content.

“This approach reduces the potential for tax avoidance and reduces the burden on tax authorities,” it added.

A nicotine-based tax may also be “difficult to administer and enforce” due to the availability of DIY mixtures and the ability to sell components separately, the paper continued.

How other European countries tax vaping

When looking at how other EU member states have reacted to the issue, the strategy paper notes that they have adopted varying
domestic taxation policies but that some do not impose any tax.

The EU’s Tobacco Products Directive legislates that e-liquids for sale in the EU do not contain nicotine in excess of 20 mg/ml.

In jurisdictions where a duty applies, it is typically on the basis of a euro rate per ml of e-liquid.

It also notes that the departed UK Government announced in its Spring Budget the intention to introduce a new excise duty on vaping products from 1 October 2026. However, Irish officials believe they are “proposing a more complex regime” as it will have three rate bands depending on the nicotine content of the product.

The UK strategy also proposes additional restrictions on flavours and for disposable vapes to be banned from April 2025.

As there is a lack of harmonised policy across the EU for vapes, it’s thought that this increases the likelihood of smuggling and illicit trade.

“Due to the size of the products concerned, and the fact that they are liquid-based, they are easily portable and may be difficult to detect from a customs perspective,” the paper said.

“However, while the implementation environment is challenging, it does not undermine the argument for applying a tax as one tool in the overall public health policy approach to e-cigarettes.”

As there is a lack of harmonised policy across the EU for vapes, it’s thought that this increases the likelihood of smuggling and illicit trade.

“Due to the size of the products concerned, and the fact that they are liquid-based, they are easily portable
and may be difficult to detect from a customs perspective,” the paper said.

“However, while the implementation environment is challenging, it does not undermine the argument for applying a tax as one tool in the overall public health policy approach to e-cigarettes.”