PM · 10-Q · 2026Q2 · Full report

German Heated Tobacco Tax

Philip Morris International Inc. · 2026-07-24 · Importance 40 · Surprise 42 · In source text

Germany’s additional excise tax on heated tobacco products was upheld under EU law by the Court of Justice of the European Union on March 14, 2024; PMI Germany provisionally paid the tax for 2022, 2023 and 2024 in January 2025 pending appeal. Japan’s multi-year tax plan harmonizes heated-tobacco and cigarette excise taxes in two steps on April 1 and October 1, 2026, with the first harmonized rate increase scheduled for April 2027 and further increases through April 2029. The EU Commission’s July 2025 Tobacco Excise Directive proposal would extend EU excise rules to heated tobacco, e-cigarettes and nicotine pouches, with a proposed January 1, 2028 implementation date and transitional periods of up to four years for several categories.

Key facts

• Excise tax payments in 2025 included the disputed supplemental tax surcharge on heated tobacco products in Germany of approximately $0.8 billion which PMI elected to pay in January 2025 to avoid future interest. source
• PM Germany filed a notice of appeal to the Federal Fiscal Court on June 19, 2024. source
• An oral hearing regarding the German HTP excise tax is expected at the earliest by the fourth quarter of 2026. source
• PMI accounted for the German supplemental tax surcharge on heated tobacco products as a reduction in net revenues and elected on January 14, 2025 to pay EUR 721 million (approximately $751 million) excluding accrued interest to avoid future addition of interest. source
• The Court of Justice of the European Union ruled on March 14, 2024 that the German fiscal regulation imposing an additional excise tax on heated tobacco products does not contravene EU law. source
• The Fiscal Court in Dusseldorf delivered its judgment dismissing PM Germany's claim on May 21, 2024. source

Impact estimates