One in ten cigarettes circulating within the EU is currently produced illegally or smuggled, according to the audit. While the European Anti-Fraud Office managed to secure €178 million in tax revenue during 2025, the illicit trade remains a persistent threat. The nature of the business is also evolving, with vapes and heated tobacco products now accounting for 13 percent of the total illicit market value.
EU struggles to track illicit tobacco trade as criminal networks shift
Criminal syndicates are exploiting fractured legislative landscapes across the European Union, costing member states over €13 billion annually in lost tax revenue. A new report from the European Court of Auditors reveals that the bloc lacks a unified system to monitor the scale or structure of this expanding underground market.
Criminal organizations have increasingly moved production facilities directly into EU member states to minimize transit risks and remain closer to consumers. Petri Sarvamaa, a member of the European Court of Auditors, noted that these groups are leveraging artificial intelligence to identify regulatory loopholes and anticipate law enforcement movements. Although the European Commission has accepted most audit recommendations, it remains resistant to drafting new proposals for assessing member state effectiveness or establishing a centralized monitoring framework.
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