South Korean Court Strikes Down Health Levy on Vape Nicotine Liquids, Citing Disproportionate Penalties

Jan.26

A Seoul court has annulled South Korea’s health-levy assessments imposed on multiple importers of nicotine liquids used for vaping. While the court agreed the nicotine could be treated as “tobacco” because it was found to be leaf-derived, it ruled the levy—stacked with other taxes and calculated on a blunt, volume-only basis—was so severe it effectively deprived businesses of the ability to operate, breaching constitutional proportionality and equality standards.

Key points

The Seoul Administrative Court has overturned penalties imposed by the Ministry of Health and Welfare on six e-cigarette liquid importers.
The court ruled that the nicotine in question comes from tobacco "leaves," making it legally classified as "tobacco."
The plaintiffs were ordered to pay a fine ranging from approximately 2.786 billion to 10.371 billion South Korean won (around $19,000 to $71,000).
The court also noted that the current method of pricing based on "volume" rather than "nicotine concentration" has led to a discrepancy in costs between high and low concentration products, resulting in an unreasonable outcome.

2Firsts, January 26, 2026

According to South Korean outlet Edaily, the Seoul Administrative Court has overturned the Ministry of Health and Welfare’s health promotion levy decisions imposed on six e-cigarette importers and operators. While the court accepted that the nicotine e-liquid at issue was treated as “tobacco” for the purposes of this case, it found the levy—considering its scale, how it was imposed, and the calculation method—was disproportionate and inconsistent with constitutional principles of proportionality and equality.

The case concerns nicotine e-liquids imported between 2018 and 2020. The ministry concluded the nicotine was derived from tobacco leaves and therefore fell under the tobacco category, and imposed levies ranging from KRW 278.6 million to KRW 1.0371 billion（approximately USD 192,234 to USD 715,599）.

The court indicated that even if the importers failed to properly assess the product’s regulatory status during importation, the levies reached a confiscatory level in some instances—potentially making continued business operations unrealistic—and could amount to a substantial restriction on freedom of occupation and property rights. The ruling also questioned whether such punitive amounts meaningfully advance the levy’s policy objectives.

In addition, the court criticized a calculation structure that applies a uniform levy per milliliter regardless of nicotine concentration, potentially producing distortive outcomes—lower relative burdens for higher-concentration products and higher relative burdens for lower-concentration products. The decision also highlighted the need for greater regulatory consistency given prior administrative interpretations and customs practices.

Image source: Edaily.

References:

[1] "담배 아냐" 소송한 전자담배 사업자…法 "담배 맞지만 부담금 취소"

Also Read:

[1] Korea’s MFDS sets 2026 plan to manage and disclose harmful constituents in tobacco products

[2] South Korea’s appeal court again sides with KT&G, Philip Morris Korea and BAT Korea in $36.24 million case

[3] South Korea Formalizes Harmful Substance Controls for Cigarettes and E-cigarettes

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