Portugal’s 2017 budget contains important and noteworthy changes for vapor products

Portugal’s budget for 2017 was approved by Parliament in Law no. 42/2016 on December 28. It contains some important and noteworthy changes for vapor products.

Portugal was among the first countries in Europe to adopt a tax on electronic cigarettes in 2014. The rate of excise was set at € 0.60 per ml of nicotine containing liquid.

Since then, several other markets in Europe have introduced similar taxes, but at considerably lower rates. In the United States, several states and local jurisdictions have adopted similar policies. Only in a few markets, such as the State of Pennsylvania, where e-cigarettes are taxed the same as other tobacco products, have the rates been similar to Portugal’s. A 40% wholesale tax in Pennsylvania has wreaked havoc on the market, leading to the closure of numerous vape shops across the state.

Portugal’s 2017 budget cuts the tax on nicotine containing liquid in half to € 0.30 per ml. Parliamentary sources indicated the reduced risk of the vapor product contributed to the decrease in the tax rate.

The excise duty on heated tobacco products, which is set at the same rate as the tax on other smoking tobacco, was restructured. The ad valorem rate was decreased by 4 p.p. to 16% while the specific component was increased 2.6% to € 80 per kilogram.