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Sweden: New Tax on Electronic Cigarettes and Other Non-Tobacco Nicotine Products Takes Effect

(July 26, 2018) On July 1, 2018, a new tax on all e-liquids and similar nicotine products, commonly referred to as e-cigarettes, took effect in Sweden. (Lag om skatt på vissa nikotinhaltiga produkter, SVENSK FÖRFATTNIGNSSAMLING [SFS] 2018:696.) The new provisions subject e-nicotine products to a new targeted 25% value-added-tax (VAT). Previously, these nicotine products were not taxed with a nicotine tax. (See Skatteutskottets betänkande 2017/18:SkU17 Beskattning av elektroniska cigaretter och vissa andra nikotinhaltiga produkter, Swedish Parliament website; Proposition [Prop.] 2017/18:187, Swedish Parliament website.)

The tax will be a targeted tax (punktskatt) of 2,000 Swedish krona (SEK) (about US$220) per liter, equivalent to SEK 2 (US$0.22) per milliliter and SEK 200 (US$22) per kilogram of the nicotine substance. Thus, the tax is based on the amount of substance and not on the percentage of nicotine in the finished product. (Skatteutskottets betänkande [2017/18:SkU17], Swedish Parliament website; Prop. 2017/18:187 at 6.)

The move to tax e-cigarettes follows from the principle of equal treatment of products—as other products containing nicotine are taxed, e-nicotine products should be taxed in a similar fashion. (2017/18:SkU17 at 7.) Arguably the health effects of the e-nicotine products are yet not scientifically proven. (Id.) Nevertheless, the Swedish Taxation Committee, to justify taxing e-nicotine products, refers to a World Health Organization report (WHO report FCTC/COP/7/11) stating that, while it is likely that e-nicotine products are less harmful than ordinary cigarettes, it is unlikely that they are harmless. (Id. at 7–8.)

The law will apply to producers, importers, and sellers of e-nicotine products. Private import of such products for personal use is exempt when limited to no more than 20 milliliter e-fluids or 200 grams of other products containing nicotine. (Prop. 2017/18:187 at 7.) Nicotine products that are classified as medicine are also exempt. (Prop. 2017/18:187 at 35.)