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Handling of alternative tobacco products (including e-liquids) and taxation with excise duty

An alternative tobacco product is a tobacco product with or without nicotine content that is not a classical tobacco product and that is used or designed for use similarly to or for a purpose similar to that of a tobacco product.

Alternative tobacco products include, for example:

  • tobacco liquid, including e-liquid, flavoured or unflavoured, with or without nicotine content and used in a device designed for consuming an alternative tobacco product or for being added to tobacco or a substitute thereof

  • solid tobacco substitute, with or without nicotine content, flavoured or unflavoured and designed for use similarly to or for a purpose similar to that of a tobacco product

Alternative tobacco products are classified as follows:

tobacco liquid with nicotine 3824 99 92; 3824 99 56
tobacco liquid without nicotine 3824 99 96; 3824 99 57
other alternative tobacco product (e.g. jelly-like product) 3824 99 96
solid tobacco substitute 2403 99 90
device filled with tobacco liquid 8543 70 90

Alternative tobacco products are not considered to include devices or accessories designed for using them.

In the case of the import or delivery of a liquid-filled device from another Member State, the quantity of liquid inside the device, rather than the device itself, shall be taxed with excise duty.
 

Rates of excise duty on alternative tobacco products

  • Tobacco liquid – 0,2 euros per millilitre.

  • Solid tobacco substitute – 89,63 euros per kilogram of substance.

  • Other alternative tobacco product – 0,2 euros per gram of product.


Excise suspension arrangement


An alternative tobacco product may be produced and stored under an excise suspension arrangement only at an excise warehouse.

An excise suspension arrangement is the suspension of excise duty liability during the production, storage, shipment or transportation of excise goods.

An excise warehouse is a location where an excise warehouse keeper is entitled to produce, store, receive and ship excise goods under an excise suspension arrangement.

The excise warehouse keeper and the registered consignee shall operate under an operating licence. The conditions for receiving an operating licence and the requirements set for the operations and the site are laid down in the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act.

An alternative tobacco product delivered from another Member State to Estonia shall be considered a product released for consumption in the other Member State regardless of whether the product is taxed with excise duty in the other Member State or not.

The excise warehouse keeper may receive an alternative tobacco product shipped from another Member State and store it under an excise suspension arrangement, i.e. with no tax liability shall be incurred on the alternative tobacco product received upon its receipt at the excise warehouse, since the goods received shall be subject to the temporary excise duty exemption under 26 (1) 21) of the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act.

Under 26 (1) 34) of the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act, during the delivery of alternative tobacco products from an excise warehouse to another Member State the products shall be subject to an excise suspension arrangement. No excise suspension arrangement, however, shall apply to the shipment of revenue stamped products to another Member State.

Excise warehouse keepers may provide services also to other goods owners. Thus, every owner of goods may buy and use the services of an excise warehouse already in operation. In this case, all transactions, including the payment of excise duty, shall be the responsibility of the excise warehouse keeper. The owner of goods shall pay the excise warehouse keeper for the provision of services.
 

Incurrence of excise duty


The excise warehouse keeper shall incur tax liability upon shipping goods from the excise warehouse without an excise suspension arrangement, that is, upon releasing them for consumption, for example, upon sending them to a regular warehouse or to shops. The excise warehouse keeper shall have a taxable period of one month and pay excise duty not later than by the 20th day of the month following the month in which tax liability has been incurred.

The registered consignee may not store goods, including alternative tobacco products, under an excise suspension arrangement. The registered consignee shall incur tax liability upon the receipt of goods shipped from another Member State and may keep only goods taxed with excise duty at its site. The registered consignee shall pay excise duty similarly to the excise warehouse keeper, not later than by the 20th day of the month following the month in which tax liability has been incurred.

Upon receiving an alternative tobacco product delivered to Estonia from another Member State by another party, excise duty shall be paid by the consignee of the product. Excise duty liability shall be incurred upon the receipt of goods, and an excise duty declaration shall be submitted and excise duty shall be paid on the 5th day from the date of the incurrence of tax liability.
 

Revenue stamping


A revenue stamp is a special marking in conformity with special security requirements which is affixed to excise goods or the sales packaging thereof and which certifies that excise duty has been paid.

The sales packaging of an alternative tobacco product shall be duly revenue stamped and meet the requirements under the Tobacco Act when it is released for consumption from the excise warehouse, imported or delivered from another Member State to Estonia or stored outside the excise warehouse.

Revenue stamps may be ordered from the Estonian Tax and Customs Board by an excise warehouse keeper, a registered consignee, an importer of products or a consignee of products released for consumption in another Member State and delivered to Estonia.

Any importer of products or consignee of products released for consumption in another Member State and delivered to Estonia is requested to notify their request for an order by e-mailing to aktsiisid@emta.ee. The e-mail needs to indicate the name and registry code of the party ordering revenue stamps.

Products that have been revenue stamped may be imported or received from another Member State only by the party who has ordered the revenue stamps.

A party ordering revenue stamps shall be forbidden to transfer revenue stamps not affixed to a product to another party.

A product may be revenue stamped at an Estonian excise warehouse, a customs warehouse, the site of a party delivering goods released for consumption in another Member State to Estonia or the site of a registered consignee.

The registered consignee and the party delivering goods released for consumption in another Member State to Estonia shall revenue stamp the product immediately after the delivery of the product to Estonia and may receive products without revenue stamps from another Member State only if they are ordering revenue stamps for these products.

When revenue stamped products are shipped to a foreign state, the goods shall not be subject to an excise suspension arrangement.

No excise duty shall be refunded on taxed alternative tobacco products shipped to another Member State.

A revenue stamp shall be affixed to a product within 90 calendar days from the receipt of the revenue stamp from the Estonian Tax and Customs Board.

Based on a reasoned written application by the recipient of revenue stamps, the time limit for affixing the revenue stamps to a product may be extended for another 90 calendar days.
 

What shall not be subject to taxation with excise duty?


A liquid suitable for consumption as a tobacco product or for the preparation of tobacco liquid shall not be subject to taxation with excise duty if it is used for the production of a product other than an alternative tobacco product.

Outside an excise warehouse, products suitable for use as alternative tobacco products, including components thereof, may be stored if the products:

  • are subject to a customs suspension arrangement;

  • are subject to excise duty;

  • are not subject to excise duty since they are designed for use for a purpose unlike that of tobacco products, and this is proven by the manner in which they are packaged, the information of their presentation for sale or other information related to the handling of the products;

  • are stored at the site of the party using them for the production of products other than alternative tobacco products;

  • are in the possession of a natural person for non-commercial purposes;

  • are exempt from excise duty.


Accompanying documents of alternative tobacco products

 

Import of alternative tobacco products

Alternative tobacco products are imported according to import regulations for the excise goods.

Delivery of an alternative tobacco product from another Member State to Estonia

Upon receiving an alternative tobacco product, before the shipment of the alternative tobacco product from another Member State the consignee shall:

  • notify the Estonian Tax and Customs Board (ETCB) via the SAAD prior notice of the SADHES national electronic system for the management of excise duty accompanying documents about its intention to receive the alternative tobacco product (if there is no CN code for the alternative tobacco product in the classification in cell 17E, the CN code should be indicated in the cell manually).

When an alternative tobacco product is delivered from another Member State to Estonia, accompanying documents shall be included with the consignment.

Within 5 days from its receipt of the alternative tobacco product, the consignee shall:

  • notify the ETCB via the SADHES SAAD receipt notice about its receipt of the alternative tobacco product;

  • confirm its receipt of the alternative tobacco product on the consignment note included with the goods and, if any shortfall/surplus becomes apparent, indicate on the consignment note the quantity of the alternative tobacco product actually received;

  • submit a copy of the consignment note for the goods received, bearing the signature of the recipient of the excise goods, to the ETCB via SADHES.

Additional information

Shipment of an alternative tobacco product from Estonia to another Member State

In most Member States, alternative tobacco products are not considered excise goods; as a result, before shipping an alternative tobacco product to another Member State, the party shipping an alternative tobacco product from Estonia, i.e. an excise warehouse keeper or some other party, shall:

  • submit the SAAD accompanying document to the ETCB via SADHES before shipment;

  • enable the ETCB to inspect the consignment before its shipment.

When an alternative tobacco product is transported to another Member State, the goods shall be accompanied by a printout of a SADHES-generated SAAD consignment note.

When alternative tobacco products are shipped to another Member State under an excise suspension arrangement, their sender (excise warehouse keeper) shall notify the tax authority about the receipt of the goods in the other Member State and submit via SADHES a copy of the consignment note proving the receipt of the excise goods.

Additional information

Exports of alternative tobacco products

Alternative tobacco products are exported according to export regulations for the excise goods.

Transitional provisions

  • If the transport of alternative tobacco products from another Member State began before 1 January 2018, this transport shall not require a SAAD prior notice or a SAAD receipt notice prepared via SADHES.

  • The sale of alternative tobacco products without revenue stamps in free circulation in Estonia and outside an excise warehouse before 1 January 2018 shall be permitted until 31 March 2018.

 

17.02.2020