• Treaty expected to come into force on Friday 10^th April 2026
• New transaction tax on goods* (see below)
• Gibraltar residents will not be subject to the Schengen Entry Exit System to travel within the EU

Two Chamber board directors attended a meeting of the Business Transition Advisory Group (BTAG) on Thursday 29 January 2026 at No 6 Convent Place along with a number of other business representatives and government officials. They were informed that the Treaty between the UK and the EU on Gibraltar’s future relationship with the EU is intended to come into effect from Friday 10^th April 2026.

It was acknowledged by all parties that participated in the BTAG meeting that this short notice is less than ideal for businesses to make the necessary adjustments and that it deviates from the longer transition period that was hoped for. However, the Government explained that this timeframe is intended to coincide with the expected deadline for the full implementation of the Schengen Entry/Exit System, which began in a number of EU member states in the Autumn of 2025 and needs to be fully implemented by 10 April 2026. It was highlighted that not aligning the two would result in significant detriment to the community, particularly around the movement of people. The Treaty text spans around 700 pages with 336 articles.

The Chamber has received a number of enquiries from members asking about the Treaty and what they need to do to comply. The information below is based on the briefing given by the Government last Thursday. The Chamber understands that its members will be able to attend a further briefing by the Government on Wednesday 4 February 2026.

Transaction Tax replaces Import Duty regime

For businesses trading in goods the new Transaction Tax will replace the current Import Duty regime and will be levied on all goods imported into, or manufactured in, Gibraltar to be sold in Gibraltar on or after 10^th April 2026. This is not a sales tax or VAT as it will be levied at the point of importation or manufacture, or when goods are brought out of bond, rather than at the point of sale. All goods placed on the Gibraltar market on or after 10^th April will be charged the new Transaction Tax at 15% (in year 1, rising to 16% and 17% respectively in years 2 and 3) subject to a number of exclusions, see below:

• The Treaty (transit regime, transaction tax, excise duties (where applicable) and compliance with EU standards) will not apply to goods the movement of which to Gibraltar started before the entry into force of the Treaty and ends thereafter. This exemption applies for 2 months. This means that such goods may be sold in Gibraltar without transaction tax (the current import duty rates will apply), excise duty (where applicable) or compliance with EU standards during that period of 2 months. After the 2 months, such goods can only be sold in Gibraltar if they comply with EU standards.
• Goods which will be entirely exempt from the transaction tax include food, non-alcoholic beverages, pharmaceuticals, medical equipment and a number of other categories. Goods relating to agriculture, children’s clothing & footwear, bicycles, artwork and antiques, among others, will also benefit from a reduced rate of transaction tax at 5%. Annex III of the EU’s VAT Directive is the reference point for the various categories of goods and corresponding minimum tax rates. This should become clear once the Treaty text is published in full.
• There will be a 3-month transition period, as from 10^th April 2026, for goods already on the market in Gibraltar before the date of entry into force of the Treaty. After that period such goods sold in Gibraltar will need to be EU-compliant. The Chamber has no further information on what enforcement measures will be taken other than checks will need to be carried out to ensure compliance.
• There will also be some transitional arrangements for goods which were in a bonded warehouse or a temporary storage facility in Gibraltar prior to the date of entry into force of the Treaty.

Personal Allowances

 Personal allowances will continue to apply for a period of three years after the entry into force of the Treaty (i.e. until 10th April 2029). The allowances will be for goods of a value of €300 euros for travellers arriving or departing by land and €430 euros for those arriving or departing by air or sea. There will also be some quantitative personal allowances on tobacco products, alcohol and fuel.

After that three-year period, the allowances regime will cease to apply and travellers will be able to travel between Gibraltar and the EU with any quantity or value of goods subject only to being able to prove that the goods are exclusively for their personal or family use or intended as presents. The frequency with which the goods are imported by travellers, their nature or their quantity must not be such as to indicate that they are being imported for commercial reasons.

Gibraltar will not be a member of Schengen but will enjoy the benefits of Schengen membership.

The Treaty will create a customs union between Gibraltar and the EU. It is not therefore the case that Gibraltar will be joining the EU’s Customs territory.

Tobacco, Alcohol and Fuel

The Treaty will provide that the retail price differential on tobacco between Gibraltar & Spain cannot exceed 15%.

The EU minimum excise rates are to be applied to both tobacco and alcohol as from 10^th April.

After 3 years (10^th April 2029) excise duties for fuel, alcohol and tobacco will have to be within 6% of Spanish excise rates for these commodities. Bunkering fuel will, however, be exempt from both the transaction tax and the excise duties as will ship supplies and all goods which may be in Gibraltar but not put for sale in Gibraltar.

Travelling to Spain

From 10^th April 2026 the Gibraltar ID card (the red card) and residence cards (the blue, green and magenta cards) will exempt Gibraltar residents from the EU’s Entry Exit System controls as well as from the obligation to register under the European Travel Information and Authorisation System (ETIAS) to travel to Spain or the rest of the EU.  There will not be any immigration controls on persons crossing the land frontier.

The Chamber board will be reviewing the information in more detail and will meet on Monday 2^nd February to discuss further. Any members are invited to contact the Chamber on 200 78376 or by email on info@gibraltarchamberofcommerce.com if they have particular concerns.

Further announcements will be made when additional information becomes available.

ENDS