Amid tax tensions, Phillip Morris International outlines €290B footprint in EU economy

BRUSSELS – Philip Morris International seized the stage on Wednesday to present its economic case. The company outlined a €290 billion contribution to the EU economy between 2019 and 2023, while urging policymakers to take a “balanced approach” to regulation.

The presentation came a day after Mario Draghi and Commission President Ursula von der Leyen stressed that Europe must put companies at the heart of its competitiveness agenda. 

The report, produced with EY-Parthenon, estimates that Phillip Morris International supported around one million jobs across Europe, including 21,500 direct employees in 2023. It points to €19.6 billion invested in 45,000 SME suppliers, €625 million in tobacco leaf purchases from EU farmers, and more than €33 billion in exports—€8.4 billion generated in 2023 alone. 

The company also highlighted €2.3 billion in R&D spending on the continent as evidence of its transition toward smoke-free products. Massimo Andolina, president of Phillip Morris International’s Europe Region, described the shift in its longstanding business model as “a factual testimonial [that] what we’re doing is real.”

Over the past decade, the long-established multinational says it has shifted more than 40 per cent of its global revenues to smoke-free products. In Europe, that share rises to 46 per cent, with some markets already surpassing 60-80 per cent.

“Companies create wealth. Governments can create the conditions for that wealth,” Andolina said, framing the company’s call for balanced fiscal and regulatory frameworks. He warned that restrictions or steep tax increases on reduced-risk products could slow progress toward phasing out cigarettes. 

Referring to the European Commission’s draft revision of the Tobacco Taxation Directive, the company’s Europe president welcomed the recognition that combustion-free products are different from traditional cigarettes and should therefore be taxed differently. He urged policymakers to shape a final framework that supports investment, consumer access and the transition away from cigarettes.

The report’s findings also prompted questions about data objectivity, with one journalist noting that much of the study relied on Phillip Morris International’s own figures. 

Bart Deckers, Senior Partner at Ernst & Young, responded that the analysis followed established market research standards, combining OECD statistics and industry reports with internal company data. He acknowledged that such studies inevitably have limitations but stressed that the methodology was consistent with professional practice.

Looking ahead, Andolina said he was confident that within the next decade a significant number of EU countries will no longer sell cigarettes. Whether that includes all member states, he added, will depend on the level of support from regulators and other stakeholders in shaping taxation and market access.

The recast of the Tobacco Taxation Directive is currently under negotiation in the European Parliament—whose role is limited to issuing a non-binding opinion—and in the Council, where unanimous approval by the Member States will be required.