For years, Poland successfully fought the cigarette black market. The share of illegal cigarettes fell from over 15 percent to 5–6 percent at the start of the decade. Radical excise hikes in 2025–2026 reversed that trend. In 2024, Poles smoked 1.85 billion illegal cigarettes – a 23.3 percent year‑on‑year increase. Budget losses reached €312 million, or about PLN 1.4 billion. Instead of reducing smoking, the hikes pushed consumers into the black market, while organised crime groups began building illegal factories inside Poland. In 2025, law enforcement seized 184 million cigarettes without Polish excise stamps – more than double the previous year’s figure.
For years, Poland has been among the countries particularly exposed to illegal trade in tobacco products. This is primarily due to its geographical location – the border with Belarus, Ukraine and the Russian Kaliningrad region has for decades remained one of the main channels for tobacco smuggling into the European Union. At the same time, Poland is the largest producer of cigarettes in the European Union, with about 85 percent of production destined for export, meaning that huge volumes of legal tobacco products flow through the country, creating additional opportunities for illegal trade.
For years after Poland joined the European Union and the eastern border was significantly tightened, the share of illegal cigarettes in the Polish market systematically decreased. From levels exceeding 15 percent at the beginning of the previous decade, it fell to around 5–6 percent in 2020–2022. It seemed that Poland had effectively brought the problem under control and could serve as an example for other countries in the region.
The change came in 2025, when the government decided on radical, sharp excise duty hikes, departing from the previous policy of predictable, gradual increases that had for years acted as a market stabiliser. This decision triggered a domino effect, the consequences of which are being felt by the entire economy – from the state budget, through the legal tobacco industry, tobacco growers, to consumers.
Scale of the black market
According to a KPMG report „Tobacco black market in the EU and Poland in 2024”, published in mid‑2025, in 2024 Poles smoked 1.85 billion illegal cigarettes. This was an increase of 23.3 percent compared to 2023, i.e. 350 million more cigarettes. This means that one in every 25 cigarettes smoked in Poland came from illegal sources, whereas in the fourth quarter of 2024 it was already one in 15 – indicating a very dynamic escalation of the problem in the second half of the year.
In volume terms, Poland ranked fourth in the European Union in terms of the size of the illegal tobacco market, behind France (18.7 billion cigarettes), Greece (2.47 billion) and the Netherlands (1.91 billion). Just a few years earlier, Poland was not among the top countries with the biggest tobacco black market problem, which shows how quickly the situation has worsened.
State budget losses resulting from the tobacco black market amounted to €312 million in 2024, or about PLN 1.4 billion. This was an increase of €114 million (57.6 percent) compared to the previous year. Across the European Union, budget losses totalled €14.9 billion, meaning that Poland accounted for about 2 percent of all EU losses in this area – a disproportionately high share relative to the size of the Polish economy.
In 2025, the situation deteriorated further. According to the Institute for Economic Forecasts and Analyses, the shadow economy accounted for 17.7 percent of GDP, i.e. over PLN 800 billion, and in the cigarette segment alone the budget was already losing about PLN 2.8 billion annually. Legal cigarette sales fell by 13 percent, while budget revenues increased by only about 3 percent, roughly the rate of inflation. This means that the gap between planned and actual excise duty revenues from cigarettes amounted to about PLN 6 billion.
Excise duty as the key driver of black market growth
Cigarettes are among the most heavily taxed consumer products. In Poland, on average about 82 percent of the retail price of a pack of cigarettes consists of taxes – primarily excise duty and VAT. The value of the tobacco product itself, i.e. production cost and margin, is only a small fraction of the final price. This price structure makes the legal cigarette market extremely sensitive to any changes in excise rates – each increase translates almost directly into a higher pack price.
At the same time, the high share of taxes in the price creates a huge space for the illegal market. Criminals who produce and sell cigarettes without paying excise duty and VAT gain a huge cost advantage – they can offer consumers illegal cigarettes much cheaper, often at only 40–66 percent of the legal product’s price. A smuggled pack of cigarettes can cost as much as half the price of a legal one.
Until 2024, Poland pursued a policy of successive but predictable excise duty increases. The so‑called excise map assumed gradual, few‑percent increases each year, allowing consumers to get used to rising prices and giving the budget certain revenues. The black market shrank under such conditions. In 2025, however, the government decided on a radical change of strategy.
Instead of the planned 10 percent increase in excise duty on cigarettes, an increase of 25 percent was introduced. For fine‑cut tobacco, the increase was 38 percent, and for heated tobacco products – 50 percent. The Ministry of Finance expected an additional PLN 2.8 billion in budget revenues. The effect was the opposite of what was intended. From January to May 2025, revenues from cigarette excise duty fell by PLN 400 million compared to the same period of the previous year, while legal product sales plummeted by a dozen or so percent.
In 2026, increases continued. From 1 January 2026, excise duty on cigarettes rose by another 20 percent, reaching a rate of PLN 414 per 1,000 cigarettes and 32.05 percent of the maximum retail price. Smoking tobacco went up by 30 percent, and novel products by 20 percent. Excise duty on e‑liquids was increased by 50 percent. The weighted average retail selling price of cigarettes for 2026 was set at PLN 1,031.46 per 1,000 cigarettes, meaning that the average price of a pack of cigarettes (20 pieces) is about PLN 23.85. Before the series of sharp increases, in 2024, the average pack price was around PLN 17–18.
Illegal production in Poland
Until recently, Poland served mainly as a transit corridor for illegal cigarettes. Goods smuggled across the eastern border, primarily from Belarus, reached Poland and were then transported further west to Europe, mainly to the United Kingdom, where cigarette prices are the highest in Europe. The Polish domestic market was not the main target of smugglers.
The radical excise duty hikes of 2025–2026 changed this situation. The increase in legal cigarette prices in Poland made illegal trade on the Polish domestic market highly profitable. Organised crime groups, which just a few years ago treated Poland only as a transit country, began investing in production infrastructure within Poland itself, building an autonomous, illegal tobacco market on the scale of a 38‑million country.
Officers of the Central Bureau of Investigation (CBŚP) and the National Revenue Administration (KAS), in conversations with the media, leave no illusions about the scale of the problem. As one CBŚP officer told the portal Salon24, criminal groups have been preparing for the excise increases for months. „They are buying machines, building facilities and looking for people to run production lines. Old gangsters are coming back to this business because they know there’s mega money in it, and if they get caught, the penalty is small. The old crews have many contacts with various groups in Poland and know how to agree so that everyone is happy,” the officer said. In his opinion, with further excise increases, „the counterfeit market will explode into space and no one will stop it”.
Data from 2025 confirm this diagnosis. The National Revenue Administration eliminated 27 illegal cigarette factories and cutting plants in 2025 and detained 80 people. Officers secured nearly 21 million cigarettes, 42.5 tonnes of tobacco and 29.4 tonnes of tobacco leaf. The value of the secured goods was over PLN 47.4 million. In the whole of 2025, KAS revealed over 184 million cigarettes without Polish excise marks, over 110 tonnes of tobacco and nearly 38.5 tonnes of tobacco leaf.
The Central Bureau of Investigation in the first half of 2025 seized over 467 million illegal cigarettes – for comparison, in the same period of 2024 it was 112 million. Thus, the increase in effectiveness (or rather the scale of the problem) is more than fourfold. CBŚP officers eliminated 13 illegal cigarette factories (compared to 6 in the first half of 2024) and 7 cut‑tobacco production plants (compared to 3 a year earlier). The estimated black market value of the seized cigarettes is about PLN 400 million.
The largest single case was revealed in May 2026, when services broke up a gang operating in the Lower Silesian, Lubusz and Kuyavian‑Pomeranian voivodeships. Eighteen people were detained, and the criminal activity had been carried out from July 2022 to February 2026. During this time, the gang put over 485 million cigarettes without Polish excise marks into circulation, exposing the State Treasury to losses of up to PLN 640 million. At one location, a fully operational factory was secured, including 13 million cigarettes, production machines and over 2 kilograms of drug precursors.
New methods and growing scale
The eastern border remains the main direction for smuggling tobacco products into Poland, and the contraband comes primarily from Belarus. The closure of border crossings, restrictions on goods traffic, sectoral sanctions and reinforced controls on the eastern flank of the European Union after the outbreak of the war in Ukraine have made traditional smuggling methods more difficult to carry out. Organised crime groups have responded with innovative techniques.
The most spectacular phenomenon is meteorological balloons, which since 2024 have been used to mass‑smuggle illegal cigarettes from Belarus across the Polish border. In 2025 alone, the Border Guard intervened in such cases over 200 times. In January 2026, officers intercepted about 1.75 million cigarettes smuggled by balloons. Smugglers collect the packages dropped from balloons on the Polish side of the border – in 2025, 29 people linked to this practice were detained, including Poles, Belarusians, Lithuanians and Ukrainians.
Experts warn that cigarette smuggling by balloons is not only criminal activity but also an element of hybrid warfare waged by Belarus and Russia. Balloons and drones used for smuggling are often equipped with sensors, GPS and other telemetric devices that allow their movements to be tracked. In this way, Russian and Belarusian services can gather information about Poland’s ability to intercept such devices and about defence systems against such incidents.
The total value of illegal cigarettes secured by the Border Guard on the border with Belarus in 2025 was PLN 10.2 million – 62 percent more than in 2024. This is, however, only a small fraction of the total, because most illegal cigarettes are detected by officers not at the border itself but already on Polish territory. In 2025, cigarettes with a total value of PLN 100.6 million were secured, of which PLN 84.8 million was from operations carried out inside the country. Over the year, the value of revealed illegal tobacco products more than doubled – by 123 percent.
Consequences for the budget and economy
The cigarette black market is not only a fiscal problem but also a serious challenge for the entire economy and state security. The Polish tobacco market is worth over PLN 50 billion annually and generates between 6 and 8 percent of state budget revenues, as well as providing jobs for hundreds of thousands of people in production, distribution, trade and agriculture. Each percentage point increase in the black market share therefore means losses counted in hundreds of millions of zlotys and a threat to jobs.
The hardest hit by the excise chaos are tobacco growers and regions dependent on tobacco cultivation, located mainly in eastern Poland. For many municipalities, tobacco meant not only jobs but also local investment and service development. The sharp drop in legal tobacco product sales, resulting from consumers moving to the black market, translated into lower demand for raw material from domestic growers. Farms face a dilemma: abandon cultivation or accept ever‑lower profitability. The spectre of unemployment and labour migration is once again looking eastern Poland residents in the eye.
Large tobacco corporations, which have invested in Poland for years and made it the largest cigarette producer in the European Union, indicate that Poland is ceasing to be a predictable market for them. Tax law instability means new investments are being put on hold and there is a threat of moving production to other countries in the region with more stable tax conditions. This is not only a blow to the budget but also a potential collapse of entire local economies that have benefited for decades from the presence of tobacco giants.
Health and social consequences
Paradoxically, the radical excise duty hikes intended to reduce tobacco consumption for health reasons are achieving the opposite effect. Consumers do not stop smoking – they simply move to the black market, where they buy much cheaper cigarettes, but produced outside the official quality control system. Illegal cigarettes often do not meet standards for tar, nicotine and carbon monoxide content, and their production takes place under conditions with no sanitary supervision. For smokers’ health, this may mean an even greater risk than with legal products.
Additionally, by buying cigarettes from illegal sources, every purchaser supports the activities of organised crime groups. Proceeds from cigarette smuggling are often used to finance other forms of criminal activity – drug trafficking, arms dealing or money laundering. In the case of smuggling from Belarus, there is also a direct link to hybrid actions aimed at Poland’s security.
European context
The tobacco black market problem is not limited to Poland – across the European Union, the share of illegal cigarettes in the market rose to 9.2 percent in 2024, and member states’ budget losses amounted to €14.9 billion. The highest black market shares were recorded in France (38 percent of the market), Ireland (32 percent) and Finland (20 percent). The black market grew fastest in the Netherlands, where due to very high cigarette prices (a pack costs over PLN 40 there), about 40 percent of cigarettes smoked in the country come from abroad.
Poland, which until recently was seen as a success story in fighting the tobacco black market, has in just two years become one of the fastest‑growing illegal tobacco markets in Europe. Experts warn that if excise policy does not change and increases continue, Poland may, within the next few years, catch up with countries such as France or the Netherlands in terms of black market share.
The European Commission plans further changes to the Excise Duty Directive (TED), aimed at further harmonising tax rates on tobacco products across the Union. This means that cigarette prices in Poland, which are still among the lowest in the EU, will have to, in the longer term, approach Western European levels. Without a simultaneous tightening of the EU’s external borders and more effective international cooperation in combating excise crime, however, this may only deepen the problem, pushing even more smokers into the black market.
