EU auditors warn illicit cigarette factories now operate across almost the entire bloc

A changing illegal market

Organised crime groups have expanded illicit cigarette manufacturing inside the European Union, with illegal production sites detected in almost every member state, according to a European Court of Auditors report released on September 8. The watchdog estimates that illicit or smuggled products accounted for about 8.8% of cigarette consumption in 2023, the latest year with consolidated figures, and that the trade costs public authorities roughly €13 billion in tax revenue annually.

The audit describes a structural change rather than a simple increase in traditional border smuggling. Criminal networks are moving machinery, technicians and raw materials inside the single market, shortening supply routes and placing factories nearer consumers. Operations can be split among several sites, concentrated in border areas and adjusted to manufacture brands tailored to particular national markets. That flexibility makes detection and disruption harder for authorities working under different national rules.

Industrial-scale production

Recent enforcement cases illustrate the scale. The Guardian’s account of the audit describes a Belgian factory that ran continuously with four production lines, each capable of producing one million cigarettes an hour. At a separate large site in Spain, police seized three million packs and five tonnes of raw tobacco, made 20 arrests and found that products had been distributed to six EU countries. These examples show operations resembling industrial plants rather than small counterfeit workshops.

Costs beyond unpaid tax

The losses are not confined to government revenue. Cheap illegal products undermine tobacco-control policies intended to reduce consumption, particularly among younger people, while the proceeds support organised criminal activity. The European Anti-Fraud Office separately reported that its 2025 work helped authorities seize more than 427 million illicit cigarettes worldwide, including 219 million at the EU’s external borders, preventing more than €178 million in losses to EU and national budgets.

Fragmented enforcement

Auditors found incomplete intelligence about the market’s size, structure and economic impact. Definitions of offences and penalties vary among member states, information exchanges are inconsistent and enforcement intensity differs across borders. Those gaps allow networks to relocate production or distribution toward jurisdictions where detection risks and sanctions are lower. The audit therefore presents coordination failure—not an absence of legislation—as a central reason criminal groups remain competitive.

What to watch

The next test is whether EU institutions and national governments turn the audit into common operational standards, stronger data exchange and more consistent penalties. Customs controls remain important, but the migration of production inside the bloc means authorities must also track machinery, raw tobacco, specialist labour and domestic distribution networks. Without closer alignment, seizures may remove individual factories while leaving the cross-border business model intact.