The illegal trade in e-cigarettes not only results in significant losses for the Polish budget but also creates an uneven playing field for legitimate companies and poses risks for consumers. The proposed legislation, known as UD363, seeks to address these issues by introducing uniform taxation rules and a technology-neutral approach to the entire segment. The new regulations, aligning with President Karol Nawrocki’s expectations for a comprehensive market strategy, have already passed through Parliament and are now awaiting the president’s decision.
Uniform Rules and Technological Neutrality
UD363 aims to streamline the operational framework of the e-cigarette market, currently hampered by inconsistent taxation across different technologies and the problem of illegal sales. Unofficial products within the tax system generate losses and create unfair competition, potentially not meeting necessary quality standards. The legislation proposes broader definitions of products and uniform taxation rules regardless of the technology used. The Sejm passed the law on September 18, and the Senate approved it without amendments on September 24. The next step lies with the president, as greater regulatory predictability is essential not just for manufacturers and distributors but also for the broader economic chain, including Polish tobacco growers.
Predictability is Key for Business
Regulatory fluctuations have been a major concern for entrepreneurs in regulated sectors. Both tax rates and the ability to foresee future operational conditions influence business decisions. An example was the debate surrounding the previous UD308 law, which the president sent to the Constitutional Tribunal, citing a lack of stability and predictability in regulations. The Ministry of Finance had already presented a new project—UD363—prior to the enactment of UD308, based on a broader, systemic approach to market regulation.
Systemic Approach Over Piecemeal Changes
UD363 introduces common rules for all product categories. The Ministry of Finance emphasizes that the goal of the new regulations is to impose equal excise burdens on e-cigarettes regardless of technology, ensuring equal fiscal treatment for vaporizing devices. According to Deputy Minister of Finance Jarosław Neneman, the project addresses previous loopholes and takes a comprehensive approach. For businesses, this signifies a shift from specific to systemic regulations, ensuring that similar products are subject to the same rules, with structural differences no longer providing a tax advantage.
Equal Competition Rules More Important Than Tax Rates
UD363 limits the exploitation of design differences between devices and the sale of parts to achieve different tax treatments. Legally operating businesses will no longer find themselves at a disadvantage compared to those taking advantage of regulatory loopholes. This aspect was widely discussed during parliamentary proceedings, with Magdalena Łośko (KO) highlighting the need to end the unequal treatment of entrepreneurs, while Jolanta Zięba-Gzik (PSL) asserted that compliance with the law should not hinder competition.
Changes to Excise Structure
The excise tax on devices is set to rise from 40 to 50 PLN, but the structure of taxation is also changing—excise will be removed from the so-called “tops,” meaning pods and refills, and concentrated on the base device. In practice, for some configurations of reusable systems, the total burden may be lower despite the higher device rate. This effect was emphasized during parliamentary debates.
Market Regulation and Combatting the Gray Market
The law also aims to limit the gray market. The issue is not only illegal sales but also the use of design differences and sales of parts to circumvent excise taxes. The new definitions will apply similar rules to products serving the same function, aiming to equalize competitive conditions. According to data from the National Revenue Administration, in 2025, officials conducted 1,172 inspections related to e-cigarette sales and confiscated 3.2 million milliliters of liquids lacking Polish excise markings. Strengthening the system serves not only as a fiscal tool but also as a means to protect legitimate businesses.
Impact on Tobacco Producers
Regulatory stability is crucial for tobacco producers as well. According to the National Center for Support of Agriculture, in 2018, approximately 4,900 farms cultivated tobacco, but by 2025, this number is expected to drop to around 3,300. Poland remains one of the largest tobacco producers in the EU, and market predictability allows for long-term planning in raw material contracting.
Expert Opinion: Equal Taxation Rules are Crucial for the Market
Szymon Parulski, a tax advisor at Parulski and Partners Law Office, emphasizes that aligning taxation rules is key—one company’s product should not be untaxed while others are paying 50 PLN in taxes (40 PLN plus VAT). It is also important to close loopholes that allow for tax avoidance through the sale of products in parts.
“I hope the president will sign the law and will not take other steps that may be suggested by those in the industry benefitting from the current legal chaos,” Parulski concludes.
