Germany faces €0.5 billion tax loss from booming illegal cigarette market

A KPMG study commissioned by Philip Morris International found that German smokers consumed an estimated 1.9 billion illicit cigarettes in the past year, raising the black‑market share of the national tobacco market from 2.2 % to 2.5 %. The analysis, which examined roughly 100 000 discarded packs, identified a growing, professionalised trade in counterfeit and smuggled cigarettes, often sold from back‑rooms or hidden sections of shops.

Across the European Union, more than 55 billion illegal cigarettes were sold, with over 100 illicit factories uncovered. France exhibited the highest illicit share at 41.4 % (about 20.5 billion packs), while Belgium reported 2.1 billion illegal cigarettes in a single year. Germany’s fiscal loss from the illegal trade is estimated at around €0.5 billion, prompting debate over a possible steep tobacco‑tax increase. Industry groups warn that higher taxes could further fuel the black market, whereas health officials argue that tax hikes remain the most effective way to reduce smoking rates.