Belgium at “epicentre” of illicit tobacco consumption that cost state nearly a billion euros in 2025

Belgium has been highlighted as an example of how “extreme policies” may help promote the trade in illicit tobacco products.

It is claimed that the country’s strict approach to all smoking products, including a ban on nicotine pouches, merely “displaces” tobacco demand into illicit markets.

This was one of the messages to emerge from a debate on illicit tobacco in Europe accompanying the publication of a report by consultancy KPMG, commissioned by Philip Morris International (PMI).

The event in Brussels was told illicit trade, which accounts for some 10% of total cigarette consumption in Europe, was "not accidental" but, rather, a “predictable consequence” when regulation “ignores market realities.”

In Belgium, the treasury lost an estimated €963 million last year because of the illegal cigarette market, according to the report. It was cited as one of the countries at the “epicentre” of this illicit consumption, which rose by 60% in 2025 to just over 2 billion units, representing just under a quarter of all cigarettes smoked in the country.

This lost tax revenue for Belgium was in addition to legally imported cigarettes purchased abroad. The total consumption without excise charges was estimated at 3.17 billion cigarettes, 37.6% of the market.

Western Europe was highlighted as the scene of the highest levels of illicit consumption. France was the worst culprit, recording counterfeit volumes of nearly 10 billion cigarettes and a 41.4% illicit share of the market, compared to 24.8% for Belgium and 22.1% for the Netherlands.

The report’s publication was particularly timely as the EU is currently preparing to revise the current Tobacco Products  Directive (TPD), which sets the rules on the manufacturing, presentation and sale of all tobacco-related products.

David Bird, a director at KPMG, said the overall picture was “complex”  even if the decline in cigarette consumption was positive. He cautioned though that the sharp rise in the illicit cigarette use was a cause for concern.

For the survey, KPMG contacted law enforcement agencies in 21 EU countries. A key finding was that criminal gangs were getting more professional and better organised. The way illicit products were sold was also evolving, with social media increasingly “an enabler” of such trade.

While France remained the biggest “by some margin” for illicit cigarette consumption, in some countries, such as Greece, it had declined.

Even so, there were six EU countries where illicit products accounted for more than 20% of all cigarettes consumed, with Belarus and Bulgaria the main culprits.

The debate was told that reducing the availability of smokeless products on the market risked pushing consumers to the illicit market. For example, an estimated  90% of vapour users buy from non-legal channels.

Stefano Betti (pictured main image), deputy director of the Transnational Alliance to Combat Illicit Trade (TRACIT), said: “When frameworks are restrictive or there is a ban on the sale of certain goods, what you can then expect is the emergence of illicit parallel markets.”

He added: “This is problematic, not least because these markets gain strength and that is why we need a smart response.” This was particularly necessary, he noted, given complexities such as counterfeit production in one country, packaging in another and retail sales in yet another one.

Donatas Skamulis (pictured below left), deputy commander of the State Border Guard Service in Lithuania, oversees the service's intelligence and criminal investigation operations. “We have improved our resilience to this trade a lot in recent years but it is still insufficient,” he said.

Cigarette smuggling from Belarus was a major security and economic issue for Lithuania, explained Skamulis. Driven by massive price disparities, organised crime groups and Belarusian operatives used advanced, low-tech methods — like GPS-tracked weather balloons and drones — to flood the country with millions of packs of contraband tobacco.

 “It is not new: we have faced a problem of cigarette smuggling for a long time and about 84% of the smuggling is done by using airspace,” he said.

The Lithuanian authorities shot down 50 drones used in smuggling operations last year alone. “We continue to monitor our borders and work closely with our neighbours, Poland, Latvia and Estonia , how to tackle this phenomena,” Skamulis added.

Asked about the impact of the counterfeit trade on the tobacco sector generally, Christos Harpantidis (pictured above right), group chief corporate affairs officer at PMI, responded that the most striking figure was the lost tax revenue. He called for “a commonsense policy,” which distinguished between products on the basis of evidence, risk and outcomes.

Michele Riccardi, deputy DG and senior researcher at Transcrime, highlighted a “much weaker policy assessment and evaluation than in the past” among policymakers.

He said the illicit trade mattered because of the impact it had on consumers and national economies, while at the same time “strengthening criminal networks.”

“This debate,” he continued, “is not just about the problem itself but also about policy outcomes so my hope is that we can connect the dots between geo-politics and law enforcement so that Europe can better tackle this issue.”

An LT balloon, used by traffickers to float cheap contraband cigarettes and goods from Belarus into Lithuania, was displayed at the event. Beneath it, a rectangular crate was attached, containing 500 to 1,500 packs of heavily taxed cigarettes and a GPS tracker.