By Timothy S. Donahue
Top Takeaways:
- Tax gap: VSK estimates €3 billion in lost revenue.
- Foreign shift: Nearly 45% of cigarettes come from outside the Netherlands.
- Illicit surge: Authorities recently seized 20.7 million cigarettes.
Dutch tobacco sales are shifting elsewhere.
The Netherlands is losing an estimated €3 billion ($3.5 billion) in annual excise and value-added tax revenue as consumers increasingly buy tobacco abroad or from illegal channels, according to the tobacco industry association VSK.
The estimate has more than doubled from €1.4 billion in 2021, as higher Dutch tobacco prices have widened the gap with neighboring markets and shifted purchases away from domestic retailers.
Recent market research cited by VSK found that nearly 45% of cigarettes consumed in the Netherlands were purchased outside the country, while almost 61% of rolling tobacco came from abroad. In 2023, the comparable figures were about 25% for cigarettes and 36% for rolling tobacco.
The trend follows a series of steep tobacco tax increases. Cigarette excise has doubled since 2020, while the tax on smoking tobacco has more than tripled. Preliminary Statistics Netherlands data showed tobacco excise revenue fell to €2.55 billion in 2025, down from nearly €3 billion a year earlier, despite the higher rates.
Cross-border purchasing is only one part of the issue.
Dutch authorities have also reported substantial seizures of illicit tobacco. Between July 23 and Aug. 7, Combiteam SMOKE intercepted more than 20.7 million illegal cigarettes in operations nationwide.
More than half were found in Rotterdam, where authorities seized about 12 million cigarettes. Another 2.7 million were discovered in delivery vans in Ridderkerk, with additional seizures in Delft, Hazeldonk, and Winschoten.
Authorities also seized about 3,000 kilograms of hookah tobacco and raw tobacco materials during the two-week enforcement period. Dutch Customs estimated that the government would have lost about €9 million in excise revenue if the seized products had reached the market.
The latest seizures add to evidence of a growing illicit market. VSK said that 106 million smuggled cigarettes have been seized in the Netherlands this year.
VSK argues that large differences between Dutch tobacco prices and those in neighboring countries are increasingly driving consumers toward foreign and illicit sellers.
However, the industry’s conclusions differ from the Dutch government’s broader assessment of tobacco taxes.
Government officials have acknowledged increased cross-border purchasing but also cite declining smoking rates. Dutch government figures show that after the 2024 tobacco excise increase, 7% of surveyed smokers reported quitting. Officials have said declining tax receipts likely reflect a combination of smokers quitting or consuming less, as well as others purchasing tobacco across the border.
Statistics Netherlands data also show that the share of people who smoke occasionally fell from about one in four in 2015 to one in six in 2025. Daily smoking declined from 18% to 12% over the same period.
But cross-border purchasing has risen sharply. In 2024, 12% of smokers said they often or always bought tobacco abroad, up from 5% in 2020. More than 40% said they sometimes bought tobacco outside the Netherlands, compared with about one-quarter in 2020.
