Much variation in wine duties in Europe

As most of you will have noticed, there is a so-called trade war going on between the USA and Europe. This has nothing to do with the wine industry, directly, but it has been dragged into it because some of the personalities behind the squabble think that it is a good idea.

This raises the issue of how much of the cost of wine to the poor consumer is due to the contents of the bottle, and how much is mandated by the government. US readers are concerned about import duties, for example, given the dramatic rise in the price they currently pay for European wine.

However, in this post, I will look at alcohol excise duties, as they apply to wine within Europe itself. Almost all European countries also have some form of value-added tax on all retail sales (sometimes called a goods and services tax); and there are, of course, import duties for non-European wine. However, some countries target alcohol with an extra tax, just for good measure; and this is the topic here.

The European Union

The EU is well documented with regard to taxes. In this case, the Tax Foundation has produced a convenient map, as shown below (click to enlarge). The prices shown are based on a standard bottle of wine, at the normal percentage alcohol. The colors reflect the size of the tax, in euros. The Foundation’s web page lists equivalent $US, if you prefer that currency.

The Foundation notes:

As one might expect, southern European countries well-known for their wines — such as France, Greece, Portugal, and Spain — have decided against taxing it or do so at a very low rate, while further north countries tend to levy taxes — sometimes hefty taxes.

This will suggest to you that the wine consumers of northern Europe are well versed in the matter of how to avoid alcohol duties, by crossing their border into another country before purchasing, where the duty is lower (see the examples my post: European wine taxes — and what to do about them).

The European Free Trade Association

As noted on the map, countries like Norway, Iceland and Switzerland are in Europe but are not part of the EU (as now is the case also for the United Kingdom). These countries are mostly part of the EFTA, and thus should be included in this post.

Switzerland keeps it simple. There are both alcohol and tobacco taxes, but: “The alcohol tax does not apply to traditional fermented products such as beer, wine and cider. Beer, however, is subject to a beer tax levied by the Federal Customs Administration.” So, wine is better than beer!

The information for Norway is not at all simple, as noted by the official web page. It seems that the excise duty for wine varies depending on the actual alcohol content (which it does not for either beer or spirits) — 5.11 NOK per percent per liter. So, a standard bottle of 13% wine would cost you an extra 50 NOK, or € 4.75. This is much higher than anywhere within the EU; which explains why the liquor store with the biggest turnover in neighboring Sweden is the one that can be most easily accessed from Norway’s capital, Oslo.

Iceland appears to be even worse. Back in 2018, the government made alcohol taxes even more onerous than they already were for the locals (see: Alcohol tax: Iceland pays the most In Europe). To quote a press release:

When compared to Norway, a neighbouring country with high alcohol taxes, taxes are on average 28.8% higher in Iceland, with taxes on fortified wines, such as port and sherry, a whopping 89% higher.

The Icelandic Federation of Trade has produced a graph illustrating the point, as shown here (click to enlarge). It is in Icelandic, but the country names are pretty clear, and you can easily guess which one is Norway and which pair is Iceland (before and after the tax change). The four bars for each country are (left to right): spirits, strong wine, light wine, and beer.

Sadly, the Icelanders have no land border to cross, in order to get cheaper wine. Perhaps this explains why their government thinks they can get away with this outrageous tax.