What are excise duties?
Excise duties are indirect taxes applied to certain products to discourage their consumption for various reasons such as public health, consumption habits, or sustainability, and which also generate revenue for the State. They are added to VAT (Value Added Tax) and, in many cases, constitute a significant part of the product's final price. In Spain, they are regulated by the Special Taxes Law.
These taxes are levied in mainland Spain and the Balearic Islands, but not in the Canary Islands, Ceuta, and Melilla, which have special tax regimes.
1. Tax on alcohol and alcoholic beverages
This tax levies the manufacturing and import of products alcoholic products at a single stage. Within this category, specific taxes are established according to the type of beverage and its alcoholic strength. In general, the tax base is calculated based on the quantity of pure alcohol contained in the beverage, expressed in hectolitres (100 litres) at 20 degrees Celsius.
Four different taxes are distinguished:
Tax on Beer
The tax rate varies according to the alcoholic strength by volume. For example, beers with an alcohol content not exceeding 1.2% vol. are exempt from tax, while those exceeding 2.8% vol. pay a higher rate.
Tax on Wine and Fermented Beverages
Applies to products such as wine and cider. In general, wines and fermented beverages with an alcohol content of up to 22% vol. have a 0% tax rate.
Tax on Intermediate Products
Affects beverages such as vermouths and wine-based aperitifs. The tax rate varies according to the alcoholic strength, being higher for those exceeding 15% vol.
Tax on Alcohol and Derived Beverages
Levies ethyl alcohol and spirits, such as whisky, rum, or gin. This is the highest tax of all and applies to high-strength beverages. The tax rate for mainland Spain and the Balearic Islands is £815.00 per hectolitre of pure alcohol, while in the Canary Islands it is £555.34.
There are exemptions and relief for denatured alcohol or alcohol intended for scientific or medicinal purposes.
2. Tax on manufactured tobacco
This indirect tax falls on the manufacturing and import of tobacco products and has an "extra-fiscal" nature to discourage consumption for health reasons.
The tax structure for tobacco is dual, combining a proportional rate and a specific rate, with minimums. The tax base is determined by both the retail selling price and the number of units or weight.
The products subject to this tax are:
Cigarettes
Rolled tobacco products for smoking
Cigars and cigarillos
Larger tobacco products
Smoking tobacco (rolling tobacco)
Loose tobacco for rolling cigarettes
Other tobacco products
Such as pipe tobacco or heated tobacco
Tax rates (as of January 1, 2025):
| Product | Proportional Rate | Specific Rate | Minimum |
|---|---|---|---|
| Cigarettes | 48.5% of RSP | £28.48 per 1,000 cigarettes | £127.50 per 1,000 cigarettes (when RSP < £204.18) |
| Smoking tobacco | 37.68% of RSP | £28.39 per kilogram | £95.63 per kilogram (if RSP < £178.44) |
| Cigars and cigarillos | 15.8% of RSP | - | £39.95 per 1,000 cigars |
| Other manufactured tobacco | 34% of RSP | - | £25.50 per kilogram |
Cigarettes:
Both a proportional rate and a specific rate are applied simultaneously.
- Proportional rate (ad valorem): 48.5% of the retail selling price (RSP).
- Specific rate: £28.48 per 1,000 cigarettes.
- Minimum rate: £127.50 per 1,000 cigarettes when the RSP is less than £204.18 per 1,000 cigarettes.
Smoking tobacco (rolling tobacco):
Both a proportional rate and a specific rate are also applied.
- Proportional rate (ad valorem): 37.68% of the RSP.
- Specific rate: £28.39 per kilogram.
- Minimum rate: £95.63 per kilogram if the RSP is less than £178.44 per kilogram.
It is important to note that the special tax on tobacco does not apply to products containing tobacco that are not smoked, such as snuff or chewing tobacco. Nor does it apply to e-cigarette liquids, which have their own special tax.
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