Gibraltar & The Treaty — The Reading Room
The circulated draft and the signed agreement
The document most widely circulated in Gibraltar is marked as a draft that still had to go through legal review. The agreement that was actually signed is a different document, and in a few places it says different things.
| The one most people have seen | The one that was signed | |
|---|---|---|
| What it calls itself | Marked as an official draft for public release, still subject to legal review | The UK’s official 2026 publication of the signed treaty, in two volumesRead the texts on thisMiscellaneous No. 9 (2026), CP 1645, two volumes |
| Date | Undated working text | Signed at Brussels, 14 July 2026 |
| Articles | 336 | 336 — the same, in the same order |
| Annexes | 43 | 30 |
| Ratified? | — | Its own title page says that the UK has not ratified The treatyThe Agreement in respect of Gibraltar between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part. It was signed in Brussels on 14 July 2026. |
| Gibraltar’s Parliament | — | Gibraltar's 2026 Act that brings the treaty into Gibraltar law, passed on 31 March 2026 on a recorded division: 14 Members for, none against and 3 absent (Gibraltar Parliament, Hansard, 31 March 2026, morning session) — certified urgent for the Entry-Exit System of 10 April; the Opposition voted for it recording misgivings about parliamentary oversight. The UK–Gibraltar Concordat of 14 July 2026 records that the UK took on the treaty's obligations with the consent of the Government of Gibraltar, after its full part in the negotiations and noting the motion of the Gibraltar Parliament of 3 March 2026 calling on the UK to sign and ratify the treaty, and that the UK would sign the treaty on that basisRead the texts on thisThe full title of Gibraltar's 2026 Act that brings the treaty into Gibraltar law is the Treaty on Gibraltar and the European Union Act 2026. |
The draft says on its own face that it was unfinished
The draft still contains a placeholder where an annex number should be, an instruction to insert a number, and a blank where a phrase was still to be specified. It also has article labels borrowed from the 2020 UK–EU Trade and Cooperation Agreement, for example “Article COMPROV.2” and “Article LPFS.19(2)”. Those labels were replaced with real article numbers before signature. The draft is marked on its face as a draft that still had to go through legal review.
What actually changed, and what follows
- •Some can stay outside the extradition arrangements. Two passages added to the treaty at signature let the EU notify, by the time of signature and for a particular country, that specified parts of the modern surrender chapter do not apply until that country’s constitutional requirements have been met. Until then extradition with that country runs on the European Convention on Extradition of 1957. Whether any such notice was given, and for which countries, is not stated in the treaty.EU countriesThe countries that belong to the European Union (EU). The treaty calls each of them a “Member State”.
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•Some EU countries can stay outside the extradition arrangements. Two paragraphs added at signature — Article 68(5) and Article 148(2) — let the EU notifyNotify / notificationIn the treaty’s language: to tell the other side, or the authority, formally. Some notifications come before the action (for state aid, the answer to the notification is awaited before acting); others report a decision or an act already made., by the time of signature and for a particular country, that specified parts of the modern surrender chapter do not apply until that country’s constitutional requirements have been met. Until then extradition with that country runs on the European Convention on Extradition of 1957. Whether any such notice was given, and for which countries, is not stated in the treaty.
- •The article on a country leaving police cooperation gained three paragraphs. The article had three paragraphs in the draft and has six in the signed text. The three new ones require the EU to tell Gibraltar when a country stops taking part. They require the EU to give written notice of the date it takes part again. They also require the EU-UK treaty committee on the Circulation of Persons to meet on cooperation already under way. Both Parties are to keep the protection of personal data already handed over.
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•The article on a country leaving police cooperation gained three paragraphs. Article 71 had three paragraphs in the draft and has six in the signed text. The three new ones require the EU to tell Gibraltar when a country stops taking part [Art 71(6)]. They require the EU to give written notice of the date it takes part again [Art 71(5)]. They also require the EU-UK treaty committeeEU-UK treaty committeeOne of the treaty’s working committees, each for a subject area, sitting under the Cooperation Council. Gibraltar has a seat on each under the Concordat. on the Circulation of Persons to meet on cooperation already under way. Both Parties are to keep the protection of personal data already handed over [Art 71(4)].
- •The airport article was retitled and rewritten. Its title changed from one about the distribution of traffic rights to one about flights to and from Gibraltar airport. In the sovereignty disclaimer the naming order was reversed: the draft named Spain first, the signed text names the UK first. The substance of the disclaimer — that nothing in the agreement affects either side’s position on sovereignty over the land the airport sits on — is in both.
- •The signed treaty has 30 annexes and the draft had 43. Nine of the draft annexes were protocols on social security, customs assistance, VAT and excise fraud, and tobacco; they are in the signed treaty, renumbered inside its own protocols. Four were declarations, which were published separately on 14 July 2026, in a Council decision in the EU Official Journal and on a separate GOV.UK page. Six declarations accompany the treaty and are not part of its text. One is on countering harmful tax regimes. One is on the selectivity of a taxation measure for state aid, which was not in the draft.
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•The signed treaty has 30 annexes and the draft had 43. Draft annexes 31–39 were protocols on social security, customs assistance, VAT and exciseExciseDuty on tobacco, alcohol and fuel, now tied to European Union (EU) minimums and, over time, to Spain’s rates. fraud, and tobacco; all of it is in the signed agreement, renumbered inside its own protocols. Draft annexes 40–43 were declarations, and they were detached from the treaty and published separately — in Council in the Official Journal, and on a separate GOV.UK page, both on 14 July 2026. Six declarations accompany the treaty and not one of them is in the treaty. They include one on countering harmful tax regimes. They also include one on the selectivity of a taxation measure for the purposes of state aidState aidPublic money or advantage given to a business. It must now be notified before it is paid, and can be challenged., which was never in the draft at all.
- •CP 1645 does not carry the declarations. Anyone working from CP 1645 — the document laid before Parliament — has the treaty and none of the declarations. Publishing declarations separately is ordinary treaty practice.
- •Medicines and medical devices carry one more condition, requiring Gibraltar to audit and inspect so that devices cannot move into the EU market.
The practical consequence, in one paragraph
Article numbers still work. Annex numbers do not. Both documents have 336 articles in the same order, so a citation to an article is safe. But there is no 31st annex in the signed treaty. Anyone whose advice, submission, press comment or parliamentary question cites an annex number above 30 is using the draft’s numbering: the signed agreement has 30 annexes. Where the two differ, the signed text governs, and the signed text is the UK’s official 2026 publication of the signed treaty, not the draft.
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Article numbers still work. Annex numbers do not. Both documents have 336 articles in the same order, so a citation to an article is safe. But there is no Annex 31 in the signed agreement. Anyone whose advice, submission, press comment or parliamentary question cites an annex number above 30 is using the draft’s numbering: the signed agreement has 30 annexes. Where the two differ, the signed text governs — and the signed text is Miscellaneous No. 9 (2026), not the draft.
What this is not. The changes found are, in the main, blanks filled and cross-references corrected. The full comparison of all 336 articles is held with the working papers. The changes are, in the main, exactly what a legal review produces: blanks filled and cross-references corrected. The finding is about accurate citation, not bad faith. The full comparison — all 336 articles, word by word — is held with the working papers.
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The document most widely circulated in Gibraltar is headed “DRAFT – SUBJECT TO LEGAL REVIEW”.
What it calls itself (the one most people have seen): “OFFICIAL – FOR PUBLIC RELEASE / DRAFT – SUBJECT TO LEGAL REVIEW”
Ratified? (the one that was signed): Its own title page says: “[The Agreement has not been ratified by the United Kingdom]”
The draft still contains “Annex X” where an annex number should be, an instruction reading “OJ: Please insert the number…”, a blank reading “the benefits to the region {to be specified}”, and article labels borrowed from the 2020 UK–EU Trade and Cooperation Agreement (“Article COMPROV.2”, “Article LPFS.19(2)”) that were replaced with real article numbers before signature.
“Distribution of traffic rights” became “Flights to and from Gibraltar airport”, and in the sovereignty disclaimer the naming order was reversed: the draft named Spain first, the signed text names the UK first.
The changes are, in the main, exactly what “subject to legal review” produces: blanks filled and cross-references corrected.
The transaction tax rate: how it is set and how it can be changed
The rate is not flat, 17% is not a ceiling, and changing either needs a regulation rather than an Act. Three bands already exist. Gibraltar's 2026 Act that brings the treaty into Gibraltar law lets the Minister amend the rates and move goods between them, and it sets the limits. Any change must keep to these limits. The first applies to changes made once 24 months have passed since the treaty entered into force: the standard rate must then be at least the lowest standard VAT rate that any EU country applies at the time of the change. The reduced and super reduced rates may cover only goods that EU VAT law allows. A change to the list of those goods may not come into force until the EU has been told. These limits do not apply where the Minister acts on a recommendation of the independent consultative body set up by Gibraltar and Spain. The treaty sets the same floor for the standard rate.
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The rate is not flat, 17% is not a ceiling, and changing either needs a regulation rather than an Act. Three bands already exist. Section 99(3) of the Treaty on Gibraltar and the European Union Act 2026 lets the Minister amend the rates and move goods between them; section 99(4) sets the limits. Under section 99(4), any change must keep to these limits. The first applies to changes made once 24 months have passed since the treaty entered into force: the standard rate must then be at least the lowest standard VAT rate that any EU country applies at the time of the change. The reduced and super reduced rates may cover only goods that EU VAT law allows. A change to the list of those goods may not come into force until the EU has been told. These limits do not apply where the Minister acts on a recommendation of the independent consultative body set up by Gibraltar and Spain [s.99(5)]. The treaty sets the same floor for the standard rate [Annex 24, Art 2(3)(a)].
The full title of Gibraltar's 2026 Act that brings the treaty into Gibraltar law is the Treaty on Gibraltar and the European Union Act 2026.
Text version of this chart: The transaction tax rate: how it is set and how it can be changed
| Item | Value |
|---|---|
| Food, water, medicines, books, solar | 0% |
| Farm goods, children’s clothes, e-bikes | 5% |
| Standard — 2026 | 15% |
| Standard — 2027 | 16% |
| Standard — 2028 | 17% |
What follows — A different rate for selected goods can be set by regulation within those limits. The 17% in the Schedule for 2028 is the lowest EU standard VAT rate at signature. The treaty floor follows the lowest rate any EU country applies at the time the rate is set, so it can move.
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Section 99(4)(a) of the Treaty on Gibraltar and the European Union Act 2026: where the change is made after the end of 24 months following the entry into force of the Treaty on Gibraltar and the European Union, “the standard rate shall be set at not less than the lowest standard VAT rate applied by a Member State at that time”. Under s.99(4)(b), the reduced and super reduced rates may cover only goods that EU VAT law allows. Under s.99(4)(c), a change to the list of those goods may not come into force until the EU has been told. Under s.99(5), none of these limits applies where the Minister amends the Schedule following a recommendation from the independent consultative body.
The 17% in the Schedule for 2028 is the lowest EU standard VAT rate at signature; the treaty floor follows the lowest rate applied by an EU country “at that time” [Annex 24, Art 2(3)(a)], so it can move.
Rates on cheap goods: the band from 2029
The treaty brings excise rates into a band around Spain’s rates in 2029; the independent consultative body advises every year on the effect of the rates. EU minimum excise rates applied from day one, except for fuel. Tobacco follows its own rules, set out in an appendix to the treaty. Within three years, the target rates must differ by no more than six percentage points from Spain’s, or equal 94% of them. If the supply of fuel to Gibraltar’s petrol stations is at risk, the EU-UK treaty committee on Economy and Trade may allow rates below the EU minimum, on the recommendation of the independent consultative body.
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Annex 24 brings excise rates into a band around Spain’s rates in 2029; the independent consultative body advises every year on the effect of the rates (Article 248(5)(b)). EU minimum exciseExciseDuty on tobacco, alcohol and fuel, now tied to European Union (EU) minimums and, over time, to Spain’s rates. rates applied from day one, except for fuel [Annex 24, Art 6(2)(a) and 6(3)]. Tobacco follows its own rules in Section 3 of Appendix 2 [Art 6(5)]. Within three years, the target rates must differ by no more than six percentage points from Spain’s, or equal 94% of them [Art 6(2)(b)]. If the supply of fuel to Gibraltar’s petrol stations is at risk, the EU-UK treaty committeeEU-UK treaty committeeOne of the treaty’s working committees, each for a subject area, sitting under the Cooperation Council. Gibraltar has a seat on each under the Concordat. on Economy and Trade may allow rates below the EU minimum, on the recommendation of the independent consultative body [Art 6(4)].
Text version of this chart: Rates on cheap goods: the band from 2029
| Track | Stages, in order |
|---|---|
| Tobacco | EU minimums from day one · price gap capped at €0.80 or 15% a packet, whichever is lower |
| Alcohol | EU minimums from day one → six-point band by 2029 |
| Fuel | Spared the day-one floor — three years to converge; Into the band |
Dates along the bottom: 15 July 2026, 2027, 2028, c. 15 July 2029
What follows — Within three years of the treaty entering into force, Gibraltar’s target excise rates must be within six percentage points of Spain’s or equal to 94% of them, and the independent consultative body set up by Gibraltar and Spain assesses the rates every year.
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What follows — Within three years of the treaty entering into force, Gibraltar’s target excise rates must be within six percentage points of Spain’s or equal to 94% of them [Annex 24, Art 6(2)(b)], and the independent consultative body set up by Gibraltar and Spain assesses the rates every year [Art 248(5)(b)].
If the price gap on a packet of 20 cigarettes is at the treaty limit of €0.80, then the lawful saving on a tobacco run is about €8 for a visitor with the 200-cigarette allowance and about €3.20 for a resident or frontier-zone worker with 80. The gap can be smaller, because the limit is the lower of €0.80 or 15% a packet. Sales that are not recorded are not covered by the returns the treaty requires.
The duty-derived price gap is capped at €0.80 a packet, or 15%, whichever is lower. This is written into a schedule to Gibraltar’s own Act. The traveller allowance is one carton, or four packets for a resident or frontier worker. There is also a €300 goods limit by land, and tobacco does not count towards it. Routine checks on travellers moving between Gibraltar and Spain are not required, though Spain’s customs may carry out non-discriminatory controls in Spain. But the treaty regulates rates, prices, traceability and reporting; it sets no volume control on tobacco that this reading has found. The tobacco rules in the treaty’s tax annex and in its tobacco protocol set a limit on the price difference with Spain and require quarterly returns of volumes, brands, operators and retail prices. No provision limiting the volume of tobacco released for consumption was found in them.
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The duty-derived price gap is capped at €0.80 a packet, or 15%, whichever is lower. This is written into Schedule 2 of Gibraltar’s own Act. The traveller allowance is one carton — four packets for a resident or frontier workerFrontier workersPeople who live in Spain and work in Gibraltar.. There is also a €300 goods limit by land, and tobacco does not count towards it [Annex 23, Arts 11 and 12]. Routine checks on travellers moving between Gibraltar and Spain are not required, though Spain’s customs may carry out non-discriminatory controls in Spain [Arrangement , para 6.7]. But the agreement regulates rates, prices, traceability and reporting; it sets no volume control on tobacco that this reading has found — Annex 24 Article 7 and Protocol PTOB.1 set a limit on the price difference with Spain and require quarterly returns of volumes, brands, operators and retail prices. No provision limiting the volume of tobacco released for consumption was found in them.
What is capped
€0.80 or 15% per packet of the exciseExciseDuty on tobacco, alcohol and fuel, now tied to European Union (EU) minimums and, over time, to Spain’s rates.-derived difference, whichever is lower, from July 2026.
What it means per trip
If the price gap is at its cap of €0.80 a packet (it may be lower, because the cap is €0.80 or 15% a packet, whichever is lower), ten packets (the 200-cigarette allowance) come to about €8 for a visitor; four packets (the 80-cigarette allowance for residents and frontier-zone workers by land) come to about €3.20.
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If the price gap is at its cap of €0.80 a packet (it may be lower, because the cap is €0.80 or 15% a packet, whichever is lower), ten packets (the 200-cigarette allowance) come to about €8 for a visitor; four packets (the 80-cigarette allowance for residents and frontier-zone workers by land) come to about €3.20 [Annex 23, Art 12(2)].
| Channel | What it shows | What it cannot show |
|---|---|---|
| Quarterly volume returns, by brand and by operator [PTOB.1] | Movement against the recent quarter. | Level. The returns show change from the recent quarter. This reading has not found a baseline level in the treaty text to compare them with. |
| Pack-level traceability, shared within 24 hours [PTOB.3] | That a Gibraltar-released pack turned up in Spain. | How many did, and at what price. It is evidence of a route, not a quantity. |
| Price returns — weighted average, minimum, maximum | Shows: the prices stated in the return. Cannot show: the prices charged in shops, where the return is based on the customs invoice and not on shop prices. | What is actually charged, if the return is written from the customs invoice. |
Monitoring and stock checks under the treatyRead the texts on thisMonitoring and stock checks [Annex 24 Art 7] | Registration, stock accounts, inspection rights. | Nothing, if they are not used. Registration and stock accounts are kept with Gibraltar’s authorities. Spain’s excise authorities may carry out joint visits to authorised tobacco warehouses in Gibraltar, on prior evidence of fraud, under the customs arrangement.Read the texts on thisNothing, if they are not used. Registration and stock accounts are kept with Gibraltar’s authorities [Annex 24, Art 7]; Spain’s excise authorities may carry out joint visits to authorised tobacco warehouses in Gibraltar, on prior evidence of fraud [Arrangement , para 3.1]. |
What follows — So the texts give no complete way to compare recorded sales with unrecorded ones: no volume limit was found, the existing level of releases carries on, the price in a return is the declared one, and registration and stock checks are run by Gibraltar’s authorities.
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What follows — So the texts give no complete way to compare recorded sales with unrecorded ones: no volume limit was found, the existing level of releases carries on, the price in a return is the declared one, and registration and stock checks are run by Gibraltar’s authorities [Annex 24, Art 7].
The agreement caps the lawful price margin on tobacco and requires the physical barriers for goods moving by land to be removed.
The treaty caps the tax-derived price gap on tobacco. This reading’s view is that the effect of a smaller gap on trade also depends on the cost of moving the goods. The same treaty also requires the physical barriers for goods moving by land to be removed. Removing the barriers does not affect the formalities required, or the checks and controls the Parties may carry out, to make sure the treaty’s rules on customs, indirect taxation and trade are applied correctly, or the treaty’s exceptions and safeguards for goods. The treaty requires all physical barriers between Gibraltar and the EU for goods moving between them by land to be removed. The treaty's own exceptions and safeguards for goods still apply, and the Parties may still require formalities and carry out checks and controls to make sure its rules on goods are applied correctly. This reading has not found a model of how removing the barriers changes the cost of moving goods.
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The treaty caps the tax-derived price gap on tobacco. This reading’s view is that the effect of a smaller gap on trade also depends on the cost of moving the goods. The same treaty also requires the physical barriers for goods moving by land to be removed. Removing the barriers does not affect the formalities required, or the checks and controls the Parties may carry out, to make sure the treatyThe treatyThe Agreement in respect of Gibraltar between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part. It was signed in Brussels on 14 July 2026.’s rules on customs, indirect taxationIndirect taxTax on spending rather than income (VAT, excise, Gibraltar’s transaction tax), collected by the seller and paid by the buyer in the price. and trade are applied correctly, or the treaty’s exceptions and safeguards for goods [Art 246(1), Art 252]. The treaty requires all physical barriers between Gibraltar and the EU for goods moving between them by land to be removed. The treaty's own exceptions and safeguards for goods still apply, and the Parties may still require formalities and carry out checks and controls to make sure its rules on goods are applied correctly. This reading has not found a model of how removing the barriers changes the cost of moving goods.
| Before 15 July 2026 | Now | |
|---|---|---|
| The control point | A staffed frontier with goods checks on exit, and a physical fence | No goods control point at the land frontier; the fences largely gone |
| How goods moved informally | Fast boats along the coast; packets thrown over the fence; concealment in vehicles queued at a staffed post | On foot or in a vehicle, in the ordinary flow, with nothing to clear |
| Cost of the operation | Boats, fuel, crew, losses to seizure, penalties, people to absorb the risk | Substantially the labour of carrying it |
| Effect of a smaller price gap | A smaller gap killed the trade, because the cost per unit moved was high | A smaller gap survives, because the cost per unit moved collapsed |
Why the receipt does not fall with it
ExciseExciseDuty on tobacco, alcohol and fuel, now tied to European Union (EU) minimums and, over time, to Spain’s rates. is charged on release for consumption in Gibraltar. It is fixed at that moment on the declared retail price, with a floor of €115 per 1,000. It is not charged on a lawful sale to a consumer. Excise is charged when goods are released for consumption in Gibraltar. This reading found no limit in the treaty text on the volume released.
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What follows — Nothing found puts a number on this. The treaty sets out a safeguard. The EU may use it if the UK, for Gibraltar, does not adjust Gibraltar’s rates, within the limits the treaty sets for those rates, after the independent consultative body finds a distortion, and the EU considers it appropriate. Where the body’s finding was made on request rather than in its yearly assessment, further conditions the treaty sets must also be met. The EU must first tell the UK, for Gibraltar, and the two sides consult. If they reach no solution both accept within 10 working days, the EU may levy VAT and excise on the goods concerned when it opens their transit to Gibraltar. The rate is that of the EU country where the transit is opened. The levy may apply for up to 30 days. It may be extended by 30 days at a time while the conditions last, with notice, until another agreed solution is reached or, if the UK, for Gibraltar, has started arbitration against an action of the EU under the safeguard, that arbitration ends. The texts do not say whether Gibraltar should set a position of its own on tobacco volumes; that is left to Gibraltar.
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What follows — Nothing found puts a number on this. Article 249 sets out a safeguard. The EU may use it if the UK, for GibraltarThe UK, for GibraltarThe treaty's second side is the United Kingdom (UK) acting for Gibraltar. The treaty's own words are “the United Kingdom, in respect of Gibraltar”., does not adjust Gibraltar’s rates, within the limits the treaty sets for those rates, after the independent consultative body finds a distortion [Art 248(6)], and the EU considers it appropriate. Where the finding was made at the Parties’ request rather than in the body’s annual assessment, the conditions in Article 249(1) must also be met. The EU must first tell the UK, for Gibraltar, and consult. If no solution both sides accept is reached within 10 working days of consultation, the EU may levy VAT and excise on the goods concerned when it opens their transit to Gibraltar. The rate is that of the EU country where the transit is opened. The levy may apply for up to 30 days. It may be extended by 30 days at a time while the conditions last, with at least four working days’ notice, until the conditions are no longer met, another agreed solution is reached or, if the UK, for Gibraltar, has started arbitration against an action of the EU under the safeguard, that arbitration ends [Art 249(1)–(8)]. The texts do not say whether Gibraltar should set a position of its own on tobacco volumes; that is left to Gibraltar.
What the EU decides under the treaty, and Spain’s part in it.
A declaration by the Council and the Commission of 31 March 2026 records that any EU measure implementing the treaty requires the prior agreement of Spain. That includes amendments, remedial measures, suspending all or parts of the treaty, and ending it. The declaration adds that this does not affect the powers of the EU or the special rights of its institutions. The treaty adds a further rule for ending it after the evaluation the treaty provides for. If Spain has asked the EU to end the treaty, the EU must take the necessary steps under its own procedures, with a view to ending it. A termination takes effect on the first day of the twelfth month after notice. The treaty applies a body of EU law to Gibraltar in the areas it covers, and that law will keep changing for as long as the treaty lasts. Spain takes part in making EU law as an EU country. Under the Council and Commission declaration of 31 March 2026, any EU measure implementing the treaty needs Spain’s prior agreement. Spain has one Commissioner, a vote in the Council of the EU and Members in the European Parliament, and Spanish officials sit in the committees where technical detail is settled. If a number of Members is wanted, it needs a source first. It has officials in the committees where the technical detail is settled. Gibraltar is represented by Gibraltar House in London and by the Brussels office the Government renamed Gibraltar’s Mission to the European Union on 8 July 2026, with a mandate of monitoring and engagement. Gibraltar has no Commissioner, no Member of the European Parliament, no vote in the EU institutions and no place in the EU committees. Its representation is Gibraltar House in London and its Mission to the EU in Brussels, with a mandate of monitoring and engagement. Under the Concordat, its nominees sit beside the UK Minister in the Cooperation Council and in the EU-UK treaty committees. There is also a faster route. Under the treaty, either side, after consultations with the other, may temporarily suspend its obligations under the first five titles of the treaty’s part on the circulation of persons (the anti-money-laundering title is not included). It may do so where there is serious non-respect of commitments under that part, or where it considers that it faces a serious and continuing threat to internal security because there are no controls between the EU and Gibraltar. The EU will take Spain’s opinion properly into account, and the declaration above requires Spain’s prior agreement to an EU suspension. A suspension takes effect on the eighth day after notice at the earliest or on a later date given in the notice, and the EU countries and the UK, for Gibraltar, are then to reinstate border control. In the precedents usually cited, the UK was an EU country; Gibraltar is not in that position now.
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Council and Commission Declaration 7553/1/26 of 31 March 2026 records that any EU measureMeasureThe treaty’s word for anything a government does that has legal effect: a law, a regulation, a decision, an administrative practice. implementing this agreement — “including amendments, remedial measures, suspension of application of all or parts of the Agreement and termination” — requires the prior agreement of Spain.
The declaration adds that this is “without prejudice to the competences of the Union and the prerogatives of the institutions”.
The treaty adds a further rule for termination after the evaluation in Article 65: “Where the Kingdom of Spain has requested the Union to terminate this Agreement ... the Union shall take the necessary steps in accordance with its internal procedures, with a view to terminating this Agreement” [Art 66(2)].
There is also a faster route. Under Article 67, either Party, after consultations with the other, may temporarily suspend its obligations under Titles I to V of the Part on the circulation of persons (the anti-money-laundering Title is not included).
It may do so where there is serious non-respect of commitments under that Part, or where it considers that it is exposed to “a serious and persistent threat to internal security” because there are no controls between the EU and Gibraltar.
The EU will take Spain’s opinion “duly into account” [Art 67(1)], and the declaration above requires Spain’s prior agreement to an EU suspension.
| Instrument | What it reaches today | Where it goes next |
|---|---|---|
| Prior agreement to EU implementing measures [Decl. 7553/1/26] | Amendment, remedial measures, suspension, termination | Spain’s prior agreement is required for any EU measure implementing the treaty, without prejudice to the EU’s competences and its institutions’ prerogatives. |
| Full membership of the EU’s institutions | The rules the UK, for Gibraltar, must accept, on a 30-day clock | Future EU law in the areas that apply to Gibraltar (excise, tobacco, customs, state aid, aviation, maritime) is made without Gibraltar voting in the EU institutions. |
| A Commissioner, 61 MEPs, party groups, a Council vote | Carve-outs and amendments in the ordinary course of legislating | Carve-outs and amendments in the ordinary course of EU legislating. |
| Officials in comitology | Traceability specifications, transit and customs procedure, technical lists | The detail set in committees, such as traceability specifications, transit and customs procedure, and technical lists. |
| Spain has half of the members of the executive committee and of the evaluation panel that award the contract for the independent consultative body, and shares its funding equally with the UK, for Gibraltar. The body assesses the effect of Gibraltar’s tax rates each year. | Gibraltar’s tax rates, assessed annually | An annual, repeatable occasion to find a distortion |
| Party to the seven administrative arrangements | The frontier, the customs union, social security | The treaty’s frontier, customs and social security provisions stop applying if the administrative arrangements they rest on are suspended or ended, without the treaty endingRead the texts on thisArticle 336(5): the frontier, customs and social security provisions stop applying if the arrangements are suspended or ended, without the treaty ending |
| Operational control of the checks | Throughput, tempo, queues; real-time customs IT access | Day-to-day handling of the checks, under the procedures in two of the administrative arrangementsRead the texts on thisDay-to-day handling of the checks, under the procedures in Arrangements and |
| Its own tax rates | The band Gibraltar’s excise must sit within | Within three years of the treaty entering into force, Gibraltar’s target excise rates apply within the limits set by reference to Spain’s rates.Read the texts on thisWithin three years of the treaty entering into force, Gibraltar’s target excise rates apply within the limits set by reference to Spain’s rates. [Annex 24, Art 6(2)(b)] |
The Spanish general election
A Spanish royal decree of 5 October 2026, published in Spain’s official bulletin on 6 October 2026, dissolves the Congreso de los Diputados and the Senado elected on 23 July 2023. It calls elections to both Chambers, to be held on Sunday 29 November 2026. The Chambers elected are to meet on 23 December 2026.
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, of 5 October 2026, published in the BOE on 6 October 2026 (no. 248, BOE-A-2026-20742): “Quedan disueltos el Congreso de los Diputados y el Senado elegidos el día 23 de julio de 2023” (Art 1); “Se convocan elecciones a ambas Cámaras, que se celebrarán el domingo 29 de noviembre de 2026” (Art 2).
The record
The frontier was closed from 1969 to 1985; the 2013 queues drew a Commission mission and continued; aviation carve-outs were held for decades.
What follows — Gibraltar has no vote in the EU’s institutions. Under the Concordat, Gibraltar’s nominees sit beside the UK Minister in the Cooperation CouncilCooperation CouncilThe treaty’s top joint body: the European Union (EU) and the United Kingdom (UK), with Gibraltar’s nominees beside the UK Minister under the Concordat. It supervises the agreement and takes the decisions the treaty reserves to it. and in the EU-UK treaty committeesEU-UK treaty committeeOne of the treaty’s working committees, each for a subject area, sitting under the Cooperation Council. Gibraltar has a seat on each under the Concordat.. The Government gave its Brussels mission a mandate of monitoring and engagement in July 2026.
There is a second agreement with Spain, it is seven years older, and the treaty ranks it above its own goods, customs, tax and level-playing-field titles.
Signed 4 March 2019, in force since 4 March 2021, no expiry. The treaty regulates goods; this one regulates who is taxed where. Under the treaty, if the treaty and a tax agreement conflict in any way, the tax agreement prevails, but only as far as they conflict. This also applies over the state aid rules. The competent authorities decide jointly, under the treaty and under the tax agreement, whether they conflict. That decision does not affect the treaty’s rules on settling disputes. Spain removed Gibraltar from its list of non-cooperative jurisdictions on 28 June 2026, by a ministerial order published in Spain’s official bulletin. The treaty began to apply on 15 July 2026.
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Signed 4 March 2019, in force since 4 March 2021, no expiry. The treaty regulates goods; this one regulates who is taxed where. Under Article 289(1), if the treaty and a tax convention conflict in any way, the tax convention prevails, but only as far as they conflict. This also applies over the state aidState aidPublic money or advantage given to a business. It must now be notified before it is paid, and can be challenged. rules. The competent authoritiesCompetent authorityThe public body put in charge of a matter. The treaty calls it the “competent authority”. decide jointly, under the treaty and under the tax agreement, whether they conflict. That decision does not affect the treaty’s dispute settlement Part [Art 289(1) and its footnote]. Spain removed Gibraltar from its list of non-cooperative jurisdictions on 28 June 2026 (Orden HAC/649/2026, BOE). The treaty began to apply on 15 July 2026.
| What it decides | What it says | Who can change it alone |
|---|---|---|
| A Spanish national who moved here after the agreement was signed | Tax resident only in Spain, in all casesRead the texts on thisTax resident only in Spain, in all cases [Art 2(1)(c)(i)] | Nobody |
| A non-Spanish national who moves here from Spain | Keeps Spanish tax residence in the year of the move and the next four tax years; not for someone who spent less than one full tax year in Spain, or a registered Gibraltarian who spent less than four years thereRead the texts on thisKeeps Spanish tax residence in the year of the move and the next four tax years; not for someone who spent less than one full tax year in Spain, or a registered Gibraltarian who spent less than four years there [Art 2(1)(c)(ii)] | Nobody |
| Someone resident in both places under each side’s own law | Spain, if any one of four tests points there (over 183 nights in Spain; a spouse, partner or dependants living there; the only permanent home there; two thirds of net assets there). If none settles it: Spain, unless the person gives reliable evidence of a home for their sole use in Gibraltar and more than 183 days thereRead the texts on thisSpain, if any one of four tests points there (over 183 nights in Spain; a spouse, partner or dependants living there; the only permanent home there; two thirds of net assets there). If none settles it: Spain, unless the person gives reliable evidence of a home for their sole use in Gibraltar and more than 183 days there [Art 2(1)(b)] | Nobody |
| Category 2 status | Is not, of itself, proof of tax residence in Gibraltar — nor is the High Net Worth scheme, the HEPSS scheme for specialist executives, or any similar scheme created in futureRead the texts on thisIs not, of itself, proof of tax residence in Gibraltar — nor is the High Net Worth scheme, the HEPSS scheme for specialist executives, or any similar scheme created in future [Art 2(1)(e)] | Nobody |
| A Gibraltar company | Spanish if any one of four tests is met: assets, income, management or ownership majority–Spanish | Nobody. Grandfathering closed 31 March 2020 |
| What Spain receives | Worker lists yearly; vessels, aircraft and vehicles every six months; the Companies Register, the Land Registry, beneficial ownership and trusts | Nobody |
| The agreement itself | Either Party may end it on six months’ notice before any year end | Either Party — Spain or the UK — can end it. The UK signed as the State responsible for Gibraltar’s external relations.Read the texts on thisEither Party — Spain or the UK — can end it [Art 7]. The UK signed as the State responsible for Gibraltar’s external relations. |
The two agreements, sector by sector
The treaty taxes goods. The 2019 agreement taxes residency and ownership.
| Group | Sectors | What reaches them |
|---|---|---|
| Both, and carrying the revenue | Tobacco and retail, banking and finance, corporate services, the port | A goods regime they must comply with and a residency regime that limits where they may put their people, owners and assets |
| The tax agreement only, through their people | Online gaming, with insurance, law and accountancy | The treaty does not tax services. The 2019 agreement regulates who is taxed where. |
| Barely either | Tourism, hospitality, aviation, technology and data | The treaty does not tax services; the 2019 agreement does not reach visitors; the treaty has its own rules on air services. |
What sovereignty covers under the two agreements
Both texts say they do not change the legal positions of the UK and Spain on sovereignty and jurisdiction. Both change what Gibraltar decides for itself in some areas, as the table below shows. The UK, for Gibraltar, and Spain signed seven administrative arrangements at Madrid on 25 June 2026. The treaty names these arrangements as the basis for its frontier, customs and social security provisions. They were published on GOV.UK on 14 July and in Spain’s official gazette on 18 July. Gibraltar’s authorities perform them. Gibraltar’s consent sits in the Concordat rather than on the page. The Concordat of 14 July 2026 records that the UK took on the treaty's obligations with the consent of the Government of Gibraltar. It records that this followed the Government of Gibraltar’s full participation in the negotiations and was done noting the motion of the Gibraltar Parliament of 3 March 2026. It says that, where relevant, the treaty’s phrase for the UK acting for Gibraltar means the Government of Gibraltar, or Gibraltar, as the case may be. It gives Gibraltar a lock on termination, as the EU gives Spain. The seven arrangements were signed at Madrid on 25 June 2026 for the UK, for Gibraltar, by the UK Ambassador to Spain, and for Spain by its Secretary General for the EU. They carry no signature from the Government of Gibraltar. Its consent is recorded in the Concordat. Since July, Gibraltar has carried out parts of the treaty through regulations made by its own Government. One example concerns ships calling at the port. The master (a term that includes the ship’s agent or another person the master authorises) sends the list of crew and passengers to the Captain of the Port, or to another authority the Minister appoints, which passes it on. The master, or the person in charge of the vessel where there is no master, must pass what is sent under the regulations to the Schengen authority at the same time and without delay. For this purpose the Schengen authority is the authority designated or otherwise competent under Spanish law; the treaty refers to the competent authorities of Spain. Not doing so is an offence punishable by a fine. Cruise ships, ferries and pleasure boats from a that enter a port which is not a border crossing point have their own rules. In a letter of 13 July 2026, laid with the Concordat, the UK Minister of State for Europe, North America and UK Overseas Territories wrote that the UK would follow the democratically expressed wishes of Gibraltar and would act against them only in truly exceptional circumstances. The letter says it would only be in the most extreme cases, such as grave impact on the UK’s essential interests, and that the Minister considers it inconceivable that such circumstances would ever arise. The letter also says that the discussions on the Concordat highlighted the nature of the constitutional relationship and the need to take stock of how it operates in practice, and that after signature and provisional application of the treaty the Minister would welcome a structured discussion between the two Governments on any issues that either side considers would merit further consideration in light of the new treaty framework. The texts held do not record that discussion. The framework of 31 December 2020 was not published by any government; ministers described its main points in January 2021. Its text, held here from an academic reproduction, included Spanish officers sharing the airport facility, Spain’s say on residence permits and goods passing through Spanish customs. It also provided for a Frontex operation for four years, after which the agreement would end if either side was not satisfied with the results. It provided for arrangements made by Spain with the Gibraltar authorities. The treaty has no Frontex operation. Its exit after the evaluation has to be chosen, and the operating arrangements were made with the UK, for Gibraltar.Third countryUsually a country outside the European Union (EU), but the treaty says in each place who counts. In the treaty's chapter on arrest warrants, a “third country” is any country other than an EU country, the United Kingdom (UK) or the UK, for Gibraltar. In the treaty's rule on data protection, references to third countries and their authorities in the EU data protection law the treaty lists do not include the UK, for Gibraltar, or its authorities, as long as the UK, for Gibraltar, has the same rules in its own law and applies them effectively, as the treaty requires. Read the treaty's text in each place to see who counts.
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The seven administrative arrangements signed at Madrid on 25 June 2026 by the , and Spain, which Article 336(5) names as the basis for the treaty’s frontier, customs and social security provisions, were published on GOV.UK on 14 July and in Spain’s official gazette on 18 July; Gibraltar’s authorities perform them, and Gibraltar’s consent sits in the Concordat rather than on the page: the Concordat of 14 July 2026 records that the UK took on the treaty's obligations with the consent of the Government of Gibraltar, after its full participation in the negotiations and noting the motion of the Gibraltar Parliament of 3 March 2026, says that, where relevant, “the United Kingdom, in respect of Gibraltar” is understood to refer to the Government of Gibraltar or to Gibraltar as the case may be, and gives Gibraltar — as the EU gives Spain — a lock on termination.The UK, for GibraltarThe treaty's second side is the United Kingdom (UK) acting for Gibraltar. The treaty's own words are “the United Kingdom, in respect of Gibraltar”.
In a letter of 13 July 2026, laid with the Concordat, the UK Minister of State for Europe, North America and UK Overseas Territories wrote that the UK would follow the democratically expressed wishes of Gibraltar and would act against them only in truly exceptional circumstances. The letter says it would only be in the most extreme cases, such as grave impact on the UK’s essential interests, and that the Minister considers it inconceivable that such circumstances would ever arise. The letter also says that the discussions on the Concordat highlighted the nature of the constitutional relationship and the need to take stock of how it operates in practice, and that after signature and provisional application of the treaty the Minister would welcome a structured discussion between the two Governments on any issues that either side considers would merit further consideration in light of the new treaty framework. The texts held do not record that discussion.
| Kind of control | What it means | What changed |
|---|---|---|
| Territorial | Whose flag flies, whose law runs | Nothing. The disclaimers hold and the dispute is where it was |
| Regulatory | What Gibraltar decides for itself | Reduced. Its law must track EU law in the covered areas — including law not yet written. Residence permits for non-EU nationals — and, on the safe reading, for British nationals who are not Gibraltarians — are notified to Spain before issue, which may object; the conditions are frozen, and the condition of a genuine connection with Gibraltar cannot be met through predetermined investments in Gibraltar’s economy or real estate or predetermined payments to the Gibraltar authoritiesRead the texts on thisReduced. Its law must track EU law in the covered areas — including law not yet written. Residence permits for non-EU nationals — and, on the safe reading, for British nationals who are not Gibraltarians — are notified to Spain before issue, which may object; the conditions are frozen, and the condition of a genuine connection with Gibraltar cannot be met through predetermined investments in Gibraltar’s economy or real estate or predetermined payments to the Gibraltar authorities [Arts 45, 50–52] |
| Fiscal | What it taxes, and who it may support | Reduced. Goods taxes to EU minimums; support needs prior authorisation; residency was settled in 2019 |
| Operational | Who stands where, who sees what | Reduced: Spanish officers check passports in the airport’s Schengen booths and may be in uniform; whether they carry weapons there is not stated. Spanish officers following a suspect into Gibraltar may carry their service weapons during that surveillance, unless the requested Participant (our reading: the side into whose territory the surveillance continues) specifically decides otherwise; Spanish officers chasing a suspect across may carry theirs; in both cases they may use them only in legitimate self-defence. Spanish customs officers present in the port, in the cases the customs arrangement allows, or on a joint visit, wear civilian clothes, are suitably identified and carry no service weapons; at the port, the authorities of the UK, for Gibraltar, escort them. Spain’s customs have continuous real-time online access to the customs information listed in the treaty. Joint maritime patrols in jointly crewed vessels, on a schedule meant to keep that surveillance permanent.Read the texts on thisReduced — Spanish officers check passports in the airport’s Schengen booths and may be in uniform [Arrangement , para 2.1.4(a)]; whether they carry weapons there is not stated. Spanish officers following a suspect into Gibraltar may carry their service weapons during that surveillance, unless the requested Participant (our reading: the side into whose territory the surveillance continues) specifically decides otherwise; Spanish officers chasing a suspect across may carry theirs; in both cases they may use them only in legitimate self-defence [Arrangement , paras 3.4(c) and 6.4(d)]. Spanish customs officers present in the port, in the cases paragraph 6.4 allows, or on a joint visit, wear civilian clothes, are suitably identified and carry no service weapons; at the port, the authorities of the UK, for Gibraltar, escort them [Arrangement , paras 6.4 and 11.8]. Spain’s customs have continuous real-time online access to the customs information listed in Annex 22 [Arrangement , paras 4.1–4.3]. Joint maritime patrols in jointly crewed vessels, on a schedule meant to keep that surveillance permanent [Arrangement , paras 3.2.2–3.2.4] |
The divergence: the two rulebooks, and who decides where they meet
Gibraltar’s financial services follow UK rules. Goods, customs and what crosses the frontier follow EU rules. Gibraltar is not choosing between British and European rules. It is already bound to both, for different things. Its finance industry follows London. Access to the UK market will come through the Gibraltar Authorisation RegimeThe GARThe Gibraltar Authorisation Regime: the United Kingdom (UK) rulebook under which that access is granted., expected around the end of 2027. This is on condition that Gibraltar’s law and its regulator’s practice stay in step with Britain’s. That is reported to Parliament every two years, and it can be withdrawn one activity at a time. Everything that crosses the frontier follows Brussels and Madrid: goods, customs, exciseExciseDuty on tobacco, alcohol and fuel, now tied to European Union (EU) minimums and, over time, to Spain’s rates., public support, residence, tax residence, and who sees whose data. Both sets of rules can be applied at the same time while they cover different things. Anti-money-laundering and personal data are covered by both sets of rules. The UK and the EU each make their own rules on both. Where the two sets differ, Gibraltar may not be able to apply both, and the texts held do not say which prevails. On 15 September 2026, a House of Lords committee put questions to the Chief Minister in the EU’s own titles: the AI Act, the Cyber Resilience Act, the Product Liability Directive as goods law. The answer was that there is freedom in pure services, but where services attach to goods the position is unclear. A UK instrument published since signature, the draft prudential regulations, names Gibraltar’s banks, public bodies and Government and keeps them within the UK’s own capital rules.
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Put to the Chief Minister by a House of Lords committee on 15 September 2026 in the EU’s own titles — the AI Act, the Cyber Resilience Act, the Product Liability Directive as goods law — the answer was freedom “in pure services” and “a murky, grey area” where services attach to goods.
| Field | Whose rules | Who holds the switch |
|---|---|---|
| Financial services | UK | HM Treasury — reviewed every two years, withdrawable line by line |
| Goods and customs | EU | The EU: if the UK, for Gibraltar, does not adjust Gibraltar’s rates, within the limits the treaty sets for those rates, after the independent consultative body finds a distortion, and the further conditions the treaty sets for this safeguard are met, then, if ten working days’ consultation bring no solution both sides accept, the EU may levy VAT and excise on the goods concerned at the rate of the EU country where their transit is opened, for up to 30 days, extendable by 30 days at a time, with at least four working days’ notice, while the conditions last, until they no longer do, another solution both sides agree is reached or an arbitration started by the UK, for Gibraltar, ends; and ending an arrangement (it takes effect on the first day of the twelfth month after notice) switches off the treaty’s frontier, customs and social-security rules while the level-playing-field, aid and alignment obligations stayRead the texts on thisThe EU — if the UK, for Gibraltar, does not adjust Gibraltar’s rates, within the limits the treaty sets for those rates, after the independent consultative body finds a distortion [Art 248(6)] and the EU considers it appropriate (and, where the finding was made at the Parties’ request rather than in the body’s annual assessment, only if the conditions in Article 249(1) are met), then, if ten working days’ consultation bring no solution both sides accept, the EU may levy VAT and excise on the goods concerned at the rate of the EU country where their transit is opened, for up to 30 days, extendable by 30 days at a time with at least four working days’ notice while the conditions last, until they no longer do, another agreed solution is reached or an arbitration started by the UK, for Gibraltar, ends [Art 249]; and ending an arrangement (it takes effect on the first day of the twelfth month after notice) switches off the frontier, customs and social-security Titles while the level-playing-field, aid and alignment obligations stay [Art 336(5)] |
| Excise, fuel and tobacco | The EU’s floor, Spain’s rate | A joint body, every year from 2029 |
| Tax residence and information | Spain | Spain or the UK — six months’ notice before a year-end ends it; Gibraltar is not itself a PartyRead the texts on thisSpain or the UK — six months’ notice before a year-end ends it [Art 7]; Gibraltar is not itself a Party |
| Anti-money-laundering | Both | Nothing published says |
| Personal data | Both | Nothing published says |
The staircase
End 2027 the Authorisation Regime · July 2029 excise enters Spain’s band · 2030 the treaty’s own review. Three dates: end of 2027, July 2029 and 2030.
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End 2027 the Authorisation Regime · July 2029 excise enters Spain’s band · 2030 the treaty’s own review [Art 330]. Three dates: end of 2027, July 2029 and 2030.
What follows — Where the two rulebooks collide, the texts do not say which gives way. The UK side holds the power to withdraw market access activity by activity (under a UK law of 2021 on financial services and HM Treasury's consultation response). What neither rulebook taxes or regulates stays for Gibraltar to decide.
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What follows — Where the two rulebooks collide, the texts do not say which gives way. The UK side holds the power to withdraw market access activity by activity [Financial Services Act 2021, s. 22 and Sch. 6; HM Treasury consultation response]. What neither rulebook taxes or regulates stays for Gibraltar to decide.