Deliverable 5.2: Illicit Tobacco Trade in Europe: Issues and solutions (2011)

Author: Luk Joossens

Executive Summary

Definitions

  1. Tax avoidance refers to legal activities to pay less or no taxes. Tax evasion refers to illegal activities to pay less or no taxes. Smuggling refers to products illegally traded across borders. Illicit trade refers to “any practice or conduct prohibited by law and which relates to production, shipment, receipt, possession, distribution, sale or purchase including any practice or conduct intended to facilitate such activity”. Illicit trade includes both smuggled and illicitly manufactured tobacco products.

The nature of tobacco smuggling over time

2) In the nineties and the beginning of this millennium, the main type of illicit trade was large-scale cigarette smuggling: containers of cigarettes were exported, legally and duty unpaid, to countries where these products had no market, and where the cigarettes disappeared into the contraband market. The transnational tobacco companies were intimately involved.

3) While in Europe the large-scale smuggling of well-known brands subsequently decreased, other types of illicit trade increased, such as illicit manufacturing, including counterfeiting and the development of new cigarette brands, produced in a rather open manner at well known locations, which are only or mainly intended for the illegal market of another country.

Read more: PACTE