Tobacco taxation plays a significant role in public finances in Austria. Currently, around 76%1 of the retail price of a pack of cigarettes consists of taxes and duties. As a result, the tobacco industry makes a substantial contribution to government revenue. In 2026 alone, tobacco taxes are expected to generate approximately €2.240 billion, making them the second-largest source of excise tax revenue in Austria after mineral oil tax.
Austria’s tobacco tax system is based on a mixed model, combining a specific excise duty (as of 1 April 2026 EUR 85.50 per 1,000 units of cigarettes) with an ad valorem component linked to the retail selling price (32.0% of the retail sales price2).
While this system generates important public revenue, high tobacco taxation can also create wide-ranging consequences, including increased incentives for illicit trade and cross-border purchasing. For this reason, it is essential that policymakers consider industry expertise when designing taxation frameworks.
Calculation example with a retail price of EUR 6.70 (pack of 20 cigarettes)3:
Tobacco tax EUR 3.85
VAT EUR 1.12
Trade margin (tobacconist)4 EUR 0.92
Industry incl. wholesale trade EUR 0.81
1 Tobacco and Value-Added Tax, based on WAP
2 The retail price is the price set by the manufacturer for individual cigarettes, cigars and cigarillos and for packs of smoking tobacco
3 As of March 2026
3 The profit margin for tobacconists is regulated by statute in Section 38 of the Tobacco Monopoly Act