Germany Gives Cigars & Pipes a Reprieve from Massive Tobacco Tax Increase (Update)

While the price of cigarettes will dramatically increase in Germany, cigars and pipe tobacco will be subject to much less dramatic tax increases than had been warned for 2027.

Update (Oct. 15, 2026) — The proposed changes have been approved and will become law in 2027. At the bottom of the post, a statement from the BdZ is published in full.

Throughout the year, Germany’s government has been working on a major update to its tobacco taxes, with a series of increases planned between 2027 and 2030. According to Bild, Germany’s ruling CDU/CSU parties have agreed to a modified version of the massive tobacco tax proposal that was introduced over the summer.

For cigars, the ad valorem tax rate will increase from 1.74 percent of the retail price to 3.83 percent. Previously, the proposed increase was 21.05 percent, a 14-fold increase.

Per a source, by 2030, the specific duty, currently 1.4 cents, will rise to 2.85 cents. The minimum tax excluding VAT, currently 7.504 cents, will rise to 13.69 cents. This information was confirmed on Friday by the Bundesverband der Zigarrenindustrie (BdZ), the German cigar manufacturers’ association.

It’s unclear what changes might exist to the specific duty and minimum tax rates, though those proposed increases were much lower than the ad valorem change, which the German cigar industry argued would decimate the country’s cigar sector.

Pipe tobacco taxes will jump from €26 per kilo to €71.50 per kilo, still half of the proposed €172 rate.

Cigarettes, on the other hand, are expected to face an even steeper price increase due to new taxes. The belief was that in 2027, cigarettes could still be found for less than €9 per pack, but Bild is reporting it’s expected to be at least €9.10, 33 cents more than expected. Previous proposals called for cigarettes to rise to at least €11.78 per pack by 2030.

Germany is one of the most important cigar markets. Due to its lower taxes, transparent pricing and open market, the country is a leading market for both Cuban and non-Cuban cigars. In 2024, Habanos S.A. described Germany as its fifth-largest market; for many non-Cuban cigar companies, it is a top three market outside of the U.S.

While today’s news is a major win for the cigar industry, it is not final. The proposal will still need to be debated in the Bundestag and formally approved before it becomes law. A finalized bill is expected later next week.

On Oct. 15, 2026, the BdZ issued the following statement:

The Federal Association of the Cigar Industry (BdZ)– the voice of the cigar and cigarillo sectors and small and medium-sized enterprises in the tobacco industry – reports:

The Tobacco Tax Amendment Act has just been adopted by the Bundestag at its second and third readings. The proposed amendment, which had envisaged a crippling increase in excise duty on cigars and cigarillos of over 1,300 per cent – or a factor of 14 – was amended by both governing parties. Instead, the duty will rise to 3.83 per cent in 2027. The specific rate will be gradually increased to 2.85 ct by 2030, whilst the minimum tax is set to rise to 13.69 ct minus VAT for the respective price class.

While the increase represents a doubling of the current tobacco duty on cigars and cigarillos, the BdZ is pleased to see that the worst has been averted.

We would like to thank our works councils, specialist retailers, consumers and the trade press for their widespread support over the past few months. It was very helpful that well-informed arguments were put forward to decision-makers.

As an association representing almost all manufacturers and importers in Germany, we have, from the very outset, highlighted the stifling effect of a drastic increase in tobacco duty, as set out in the drafting guidance, and described the impact on the small and medium-sized family-run businesses in the cigar industry, suppliers and specialist retailers. Several thousand jobs would have been put at risk without achieving any real fiscal benefit.

Fiscal policy must always be based on the principle of affordability and take into account the specific circumstances of the economic actors involved. From a public health perspective, too, cigars and cigarillos constitute an exception due to their specific consumption and consumer profile. They are smoked only occasionally by older consumers. There is demonstrably no issue regarding addiction or the protection of minors. Cigars and cigarillos are not gateway products and do not serve as substitutes for other tobacco products.

Our industry has been committed to Germany as a business location for generations – in some cases for over 200 years. We would have liked to see a fact-based approach from the relevant Ministry of Finance and from certain sections of the political sphere. The compromise now reached does not correspond to the coalition agreement or the positive experiences gained from previous tobacco tax models. The proposal put forward in the drafting guidance is unprecedented in the history of German tax policy.

The BdZ will continue to emphasise time and again that cigars and cigarillos are purely an enjoyment and cultural good intended for occasional consumption by adults of a certain age.

The today‘s vote is a strong result of the ongoing work of our association explaining decissionmakers the differences between the tobacco products and that cigars and cigarillos made in Europe or other countries, hand or machinemade, have to be treated different.

Update (Oct. 16, 2026) — ECMA has issued a statement.

“Yesterday’s vote is a clear recognition of the ongoing education work in Europe about the unique characteristics of its cigar industry, but, also, of the importance of a differentiated regulatory framework to protect its workers in deeply rooted SMEs and family-owned businesses,” said Paul Varakas, director general for the European Cigar Manufacturers’ Association, in a statement.

Update (Oct. 9, 2026) — Added clarification from the BdZ

Update (Oct. 15, 2026) — The proposed changes have been approved and will become law. The BdZ has issued another statement.

Update (Oct. 16, 2026) — Added a statement from ECMA. This post was originally published on Oct. 8, 2026.