Implementation of Gibraltar’s post-Brexit treaty with the EU set for 10 April

The Gibraltar government confirmed, in a briefing to the Brexit Transition Advisory Group (BTAG) on 29 January, that the expected date for the entry into force of the UK-EU treaty to govern Gibraltar’s post-Brexit relationship with the EU is 10 April 2026, a significant advancement on previously indicated timelines for the treaty’s application.

The European Commission had previously announced on 12 December that negotiators from the EU, the UK, Gibraltar and Spain had successfully completed work on the legal text of the new treaty. Political agreement on the key elements was reached last June after almost four years of negotiations.

“The text is currently undergoing legal review by the EU and the UK before we can proceed with our respective internal procedures leading to the signature and conclusion of the future Agreement,” said a Commission spokesperson.

“The main objective of the future Agreement is to secure the future prosperity of the whole region. This will be done by removing all physical barriers to the movement of persons and goods between Spain and Gibraltar, while preserving the Schengen area, the EU Single Market and Customs Union. This will bring confidence and legal certainty to the lives and well-being of the people of the whole region by promoting shared prosperity.”

All parties to the treaty are now working towards the 10 April target date for implementing the treaty because this coincides with the launch of the EU’s new Electronic Entry System (EES) and will therefore eliminate the risk of disruption at the Gibraltar frontier.

During the briefing, the Gibraltar government outlined key elements of the treaty, which comprises over 330 articles and, including annexes and protocols, runs to almost 700 pages. A substantial portion of the text relates to goods, customs procedures and indirect taxation.

At its core, the treaty establishes a customs union between Gibraltar and the EU, removing customs duties on goods moving between the two. Provisions mirroring standard EU rules on the free movement of goods, customs processes and the prevention of unfair trading practices will apply.

Separate regimes are provided for the import and export of EU goods and non-EU goods, with detailed provisions set out in annexes. Indirect taxation measures cover VAT and excise duties, alongside the creation of an independent body to monitor market competitiveness.

Under the treaty, EU standards will become the norm for goods placed on the market in Gibraltar, but the government confirmed that transitional arrangements will apply from the date of entry into force to cover goods already on sale in Gibraltar or in transit to Gibraltar before 10 April.

A standard rate of Transaction Tax of 15% will apply upon the entry into force of the treaty. Subject to assessments to be made by the independent body, this will increase to a level equivalent to the lowest standard VAT rate applied by any EU Member State, which is currently 17%.

Reduced and zero rates of transaction tax will apply to a range of essential goods, mirroring the EU VAT framework. Excise duties on tobacco, alcohol and fuel will also move towards EU minimum levels during a phased implementation.

The treaty text will soon be circulated by the European Commission to the member states and publication is expected to follow within a period of weeks. Once the legal review is complete, the agreement can proceed to ratification.

It is understood that, as an EU agreement, ratification will only be required in the European Parliament rather than the national parliaments of each member state. For the UK, the ratification process will start with a motion in the Gibraltar parliament calling on the UK to ratify the treaty, after which it will have to be approved by the UK parliament.

The Gibraltar government, which has already approved the text for ratification, said it welcomed the “positive conclusion” of the negotiation on the treaty text. “We remain committed to transparency: the final treaty will be made public and subject to the full scrutiny of the Gibraltar, UK and EU parliaments as part of the process of ratification,” said a spokesperson.

“This agreement was negotiated with the EU by the Gibraltar government alongside the UK government and promises to be a good deal for Gibraltar after many years of uncertainty,” said Alex Powell, Managing Director of Sovereign Trust (Gibraltar). “The forthcoming publication of the final treaty text will allow businesses and residents alike to assess the detail. We will continue to keep clients informed as the ratification process advances.”