The liquid tax - everything you need to know about it

Posted By Haus des Dampfes Balan on May 2022

The liquid tax - everything you need to know about it

For decades, the tax authorities have made good money from the passion that many people have for tobacco products. Ever since the triumph of liquids, it was obvious that vaping would also be given a symbolic tax stamp at some point. What was long expected is now certain - the liquid tax is coming. We answer your most important questions. Don't panic, it won't be as bad.

The liquid tax comes in summer

We have recently learned that it will not only be tobacco products that will be subject to a tax surcharge in the future. On July 1, 2022, the liquid tax will come and with it comprehensive taxation for liquids. The first step towards a liquid tax was already taken with a draft law in 2020.

The measure was ultimately decided upon by modernizing the Tobacco Tax Act (TabStMog). Despite extensive protests, the law was passed on June 11, 2021 and ultimately published in the Federal Law Gazette on August 17, 2021. This was an expected move intended to equate tobacco and tobacco substitute products on some level.

Where is the special tax due and where is it not?

From the beginning of July, the tax will apply to all products that you can vaporize in an e-cigarette. Of course, this primarily affects nicotine-containing liquids and nicotine shots. As in the case of tobacco, the background here is of course the prohibitive effect of the tax. Unfortunately, no political agreement could be reached on nicotine-based taxation.

However, the tax is not only limited to these products, but also applies to nicotine-free liquids, flavors and bases as well as the basic ingredients propylene glycol and glycerin. But there is also good news: E-cigarettes and their corresponding accessories, ranging from the battery carrier to the starter kit, are not affected by the tax surcharge. The mandatory VAT rate remains there.

How bad does it really get?

We can't avoid the tax - but we can prepare for it with a few deep breaths. Like the tobacco tax, the liquid tax is based on a graduated model. Accordingly, the tax will be increased in the coming years from July 1, 2022 to 2026. From the beginning of July, the tax will be 0.16 euros per milliliter of liquid. By 2026 the tax will rise to 0.32 euros per milliliter of liquid.

As with other tobacco products, the tax is shown through a tax stamp. But we also have further good news for all vapers: Yes, vaping will become more expensive. But it could have been even worse. Until the expert hearing in the Finance Committee in May 2021, the draft law contained a further gradual tax increase based on nicotine content.

Don't worry: the price increase doesn't take effect immediately

And we have some good news for you. With the official introduction of the tax on July 1st, not all liquids will suddenly become more expensive. The law stipulates that all taxable products produced from July 1, 2022 must be subject to liquid tax.

All liquids produced up to that point can still be sold tax-free without a tax surcharge. Many manufacturers have already responded with massive production adjustments and stockpiled larger quantities of liquids. Nevertheless, the untaxed products will gradually disappear from the market. We can therefore recommend that passionate vapers also stock up on a small supply of their favorite liquids.

How will vaping change as a result of the liquid tax?

Even if the e-cigarette is a significantly less harmful alternative compared to smoking cigarettes, the state is also aiming to prevent consumption to a certain extent. At this point, we would of course have wished that this had been taken into account when constructing the tax, as well as vaping as an aid to quitting tobacco smoking.

Nevertheless, we would like to end by giving you a brief look at how vaping will change in the future. You know: If you know what's coming in the future, you can react and look forward to what's coming. So what will happen?

- Mixing yourself remains cheaper than ready-made liquids - but the cost advantage disappears.

- Due to the high costs, the liter bases will probably disappear from the German market in the long term.

- From 2023 it could significantly reduce the variety of flavors, especially among small manufacturers.

- By the final stage of the tax expansion, the price of liquids will almost double.

- Cheek steamers will dominate the market due to their lower liquid consumption, while lung steamers will become a luxury item.

Conclusion : Vaping is still cheaper than smoking

Even the liquid tax cannot eliminate three central points. First: Vaping is still significantly less harmful than smoking tobacco. Secondly, the e-cigarette is proven to be an effective way to get away from blue haze. And thirdly: Despite all the taxes, vaping is still significantly cheaper than smoking.