Germany Expected To Dodge Massive Cigar Tax Blow

le 9 October 2026

A political compromise is taking shape in Berlin. Rapporteurs from the coalition’s parliamentary groups have abandoned a reform that would have driven up prices by 50%.

The threat of a tax storm appears to be receding for the German cigar market. While the industry had raised the alarm in September over a proposed amendment—which envisaged an *ad valorem* tax of 21.05% starting in 2027 and threatened to drive up final cigar prices by more than 50%—parliamentary negotiations in recent days have resulted in a compromise that is less damaging to the sector.

According to the Bundesverband der Zigarrenindustrie (BdZ, the industry’s trade association), discussions among rapporteurs regarding the planned revision of the tobacco tax (Tabaksteuer) have now concluded. Lawmakers from the governing coalition appear poised to abandon the worst-case scenario.

A contained tax rate of 3.83%

Instead of the drastic 21.05% rate, the ad valorem tax on cigars and cigarillos will be set at 3.83% in 2027. Meanwhile, the specific fixed component will rise gradually, reaching 2.85 euro cents per unit by 2030.

For handmade long-filler cigars, the impact on retailers will be moderate: the automatic price increase will amount to a few tens of cents per cigar (an estimated shift of 2–3% in the final retail price)—far from the 50% hike initially feared by manufacturers.

When contacted by L’Amateur in September, the Villiger Group agreed to quantify the actual impact on its products. A Casa de Nicaragua Churchill, currently sold at €4.40 per stick (in a bundle), would rise to €6.80, while a premium cigar like the La Libertad Gran Toro—currently €11—could climb to €17.30. This represents increases of 55% to 57%.

Caution advised ahead of the October 16 vote

However, one area requiring close attention remains regarding entry-level products and cigarillos: the agreement includes an increase in the minimum tax (Mindeststeuer) to 13.69 cents per unit (excluding VAT). According to our calculations, this hike will primarily affect products sold for less than €0.55 a piece.

While the BdZ and manufacturers are relieved, a degree of caution remains necessary. The compromise text will be debated by the Finance Committee next week before undergoing the final vote in the Bundestag—during the second and third readings—on October 16. Only after this vote takes place will the BdZ officially express its relief.

Laurent Mimouni
Photo: ©Deutscher Bundestag / Inga Haar

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