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The current import duties regime will cease to apply on the entry into force of the treaty.

Non-EU goods which are to be placed on the market in Gibraltar will be subject to such customs duties as may be due on those goods in accordance with the EU Common External Tariff (see further below).

New rules on a Transaction Tax and Excise Duties will be introduced on all products placed on the market in Gibraltar. The excise duties will apply to tobacco, fuel and alcohol products. These three products will be subject to both the transaction tax and the excise duties.

Customs duties on non-EU goods will be applied and charged at the EU designated customs posts in accordance with the EU Common External Tariff.

The transaction tax and excise duties (where applicable) will be levied upon the importation of the goods into Gibraltar. When the goods are manufactured in Gibraltar, they will be levied when the goods leave the production site. They shall be charged and collected by Gibraltar Customs.

The transaction tax and excise duties will only apply when the goods are to be placed on the Gibraltar market. So, if goods are imported with the aim of being placed in a special customs procedure, the transaction tax and excise duties will only be levied once and if the goods are released from that procedure to be put on the market in Gibraltar.

Yes. Where a trader has already paid the transaction tax and excise duties on a product that is subsequently to be exported to the EU, the transaction tax and excise duties will be refunded once the exporter can prove that VAT and excise duties have been paid in the EU.

Where the product is to be exported to a non-EU country (such as the UK), the transaction tax and excise duties will be refunded when the EU designated customs post informs Gibraltar Customs that all formalities for the export of the product have been completed.

The taxable amount for goods imported into Gibraltar shall be determined with reference to the value for customs purposes. It shall include, insofar as these elements were not already included in the customs value:

(a)       taxes, duties, levies and other charges (including excise duties) due by reason of importation, excluding the transaction tax to be levied; and

(b)       incidental expenses, such as commission, packing, transport and insurance costs.

The taxable amount for goods produced in Gibraltar shall be the open market value at the time the goods leave the production site. ‘Open market value’ means the full amount that, in order to obtain the goods in question at that time, a customer at the same marketing stage would have to pay, under conditions of fair competition, to a supplier at arm's length in Gibraltar. Where no comparable supply of goods can be ascertained, ‘open market value’ shall mean an amount that is not less than the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time the goods leave the production site.

Goods imported into Gibraltar from the EU by traders will not be subject to EU customs duties or to VAT and excise duties applied in the EU but will be subject to the transaction tax in Gibraltar when the goods are imported for placing on the market in Gibraltar.

Goods imported into Gibraltar from the UK by traders will not be subject to VAT and excise applied at source in the UK but will be subject to the transaction tax in Gibraltar when the goods are imported for placing on the market in Gibraltar.

Where the goods are of UK origin, as set out in the EU-UK Trade and Cooperation Agreement (the “TCA”), they will not be subject to EU customs duties when cleared for importation into Gibraltar. Where the origin of the goods is not the UK but a third country, so that the goods are merely being transported from the UK, the goods will be subject to whatever EU customs duties are due on such goods under the EU’s Common External Tariff. This is to ensure that the UK / Gibraltar trading route does not circumvent the EU’s Common External Tariff. This applies equally to goods imported from third countries other than the UK. As stated above, such customs duties will be levied by the EU customs post performing the customs clearance formalities to allow the importation of those goods into Gibraltar. The customs duties collected with respect to goods destined for Gibraltar will be reimbursed, minus administrative costs, to HM Customs Gibraltar in accordance with procedures agreed under the treaty.

The standard rate of TT shall not be below the lowest standard VAT rate applied by an EU Member State, which currently is 17%. This will start at 15% at the entry into force of the Agreement increasing annually to 17% by the third year: see further reply below to Question B.12 on the “Role of the independent body”.

A reduced rate of 5% and a super reduced rate of 0% will apply to certain goods. The definition of the product categories which can benefit from the reduced or super-reduced rates are to be aligned with what is provided for under Annex III of the EU VAT Directive. The choice is determined by that list. These are:

Super-reduced rate of transaction tax of 0%:

• Foodstuffs (including beverages but excluding alcoholic beverages) for human and animal consumption; live animals, seeds, plants and ingredients normally intended for use in the preparation of foodstuffs; products normally used to supplement foodstuffs or as a substitute for foodstuffs.
• Supply of water.
• Pharmaceutical products used for medical and veterinary purposes, including products used for contraception and female sanitary protection, and absorbent hygiene products.
• Medical equipment, appliances, devices, items, aids and protective gear, including health protection masks, normally intended for use in health care or for the use of the disabled, goods essential to compensate and overcome disability.
• Supply, including on loan by libraries, of books, newspapers and periodicals either on physical means of support or supplied electronically, or both, (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), other than publications wholly or predominantly devoted to advertising and other than publications wholly or predominantly consisting of video content or audible music; production of publications of non-profit-making organisations.
• Supply of solar panels to be installed on and adjacent to private dwellings, housing and public and other buildings used for activities in the public interest.

Reduced rate of transaction tax of 5%:

• Goods of a kind normally intended for use in agricultural production but excluding capital goods such as machinery or buildings; and, until 1 January 2032, supply of chemical pesticides and chemical fertilisers.
• Live equines.
• Live plants and other floricultural products, including bulbs, cotton, roots and the like, cut flowers and ornamental foliage.
• Children’s clothing and footwear; children’s car seats.
• Bicycles, including electric bicycles;
• Works of art, collectors’ items and antiques listed in Annex IX, Parts A, B and C of the EU VAT Directive.
• Tools and other equipment of a kind normally intended for use in rescue or first aid services when supplied to public bodies or non-profit-making organisations active in civil or community protection.

No. Other exemptions which are spread throughout the main body of the EU VAT Directive, and described as mandatory exemptions, shall also apply. These currently include: bunkering fuel; the supply of goods for the fuelling and provisioning of vessels used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities; the supply of goods for the fuelling and provisioning of aircraft used by airlines operating for reward chiefly on international routes; the supply of goods closely related to the provision of children’s or young people’s school education or university education, vocational training or retraining by bodies governed by public law having such as their aim or by other organisations recognised as having similar objects; the supply of human organs and blood, the supply of dental prostheses by dentists and dental technicians.

In addition, as a specific exemption in the treaty, LNG imported and used for the production of electricity as well as electricity produced in Gibraltar shall be exempted from transaction tax and excise duty.

The EU minimum excise rates shall apply at the entry into force of the treaty on tobacco and alcohol. A retail price differential mechanism with Spain of 0.80 EUR or 15% shall also apply in relation to cigarettes. No excise duties will be applied to fuel for the first three years of application of the treaty.

After those first three years, all excise goods will be subject to an excise duty rate that can be no lower than 6% from the excise duty rates applied by Spain.

Yes. These too will be aligned with what is provided for in EU excise legislation. These currently include: fuel supplied to commercial vessels and aircraft; energy inputs used to create electricity; and goods exported from Gibraltar.

An independent consultative body will be appointed by Gibraltar and Spain to assess the effect of the rates of the transaction tax and excise duties on market conditions.

This body may recommend that a higher or lower standard rate of transaction tax and excise duties should apply to a selection of goods or categories of goods where it has found that there exist significant distortions in trade between Gibraltar and the Campo de Gibraltar which are linked to the differences in the levels of the transaction tax and excise duties charged in Gibraltar compared to the rates of VAT and excise duties charged in Spain.

The higher rate it may recommend would be to such a level as to avoid the distortion caused by the different rate of the transaction tax and excise duties in Gibraltar and VAT and excise duties in Spain. The lower rate of transaction tax can be up to 2% below the lowest applied by any EU Member State but never below 15% which is the floor set up by the EU VAT Directive. In the case of excise duties, the lower rate can never be lower than the EU minimum rates with the exception of fuel in petrol stations, where, in case of risk of supply, it may recommend a rate lower than the EU minimum rate.

A safeguard clause may be triggered by the EU when there is non-compliance with a recommendation of the independent body where significant distortions persist.

No.

No.

No.

There will not be limits on the quantity of goods that a Gibraltar trader may sell online to a consumer in the EU. As far as taxation is concerned, the destination principle will apply. That is to say, the consumer will not pay the transaction tax but will be required to pay the VAT and excise duties in his/her EU Member State of residence.

Under EU law, when purchasing a motor vehicle in one EU Member State and registering it in another, VAT is typically paid in the country of registration at that country’s VAT rate. In some cases where the seller insists on the payment of VAT in the State of purchase, the buyer can obtain a refund of that VAT when s/he registers the vehicle in his/her country and pays the VAT there. That same regime will apply under the treaty.

Duty free sales at the airport will continue for passengers travelling to non-EU destinations such as the UK.

Article 256(1) of the treaty places on Gibraltar an obligation to ensure that goods may be produced or placed on the market in Gibraltar only if they comply with the relevant rules of EU law governing the production or placing on the market of those goods. The term "placed on the market" is not defined in the treaty but, since it is a concept of EU law, it will be interpreted in accordance with EU law. EU law in this area, including in relation to the concept of "placed on the market" is very detailed and complex. Operators having specific transactions in mind should, as a first step, consult the EU Commission's "Blue Guide" on the implementation of EU product rules.

In general, what this Article requires is for products which are intended to be placed on the market in Gibraltar (e.g. offered for sale in Gibraltar), put into service in Gibraltar (e.g. a lift) or used in Gibraltar for own-use (e.g. machinery imported by a construction company) to comply with EU harmonised product standards where EU rules exist in relation to the particular products in question.

In relation to products circulating in Gibraltar, continued compliance with these requirements will be checked by the Gibraltar Office of Fair Trading.

In relation to products imported into Gibraltar which are on the market in the EU, these products will be assumed to be compliant with these requirements.

In relation to products imported into Gibraltar from outside the EU which are intended to be placed on the market in Gibraltar or intended for private use or consumption in Gibraltar, compliance will be checked as part of the customs processes carried out at the EU designated customs posts.

Notably, a product is not considered to be "placed on the market" where:

• it is bought by a consumer in a third country while physically present in that country and brought by the consumer into the EU or Gibraltar for the personal use of that person;
• it is not placed in free circulation in Gibraltar when it is introduced into Gibraltar, i.e. the product is placed into a special customs procedure instead.

In relation to "locally transformed goods", where a modified product is considered a new product (e.g. where the product has been subject to important changes or overhaul) it must comply with these requirements when it is made available on the market in Gibraltar or put into service in Gibraltar.

Goods which are currently in a special customs procedure under Gibraltar legislation will be subject to Gibraltar transaction tax and Gibraltar excise duties (if applicable) at the point that they are released for free circulation in Gibraltar, provided they are released for free circulation in Gibraltar after the treaty has entered into force.

The value of the goods at the point that they are released for free circulation in Gibraltar will be based on the original customs valuation at the point the goods were introduced into Gibraltar and not on the market value of the goods at the point that they are released for free circulation in Gibraltar.

Yes. See further response to the question on airport duty-free sales for travel to non-EU destinations.

Vehicles, whether used for private or commercial purposes, will be charged transaction tax, at a minimum, at the standard rate — therefore 15% in the first year of the treaty entering into force, rising to 17% by the third year. This is subject to a policy decision which HMGoG will be taking as to whether higher rates will be applied for certain vehicles (as is the case today).

Separately, private vessels imported into Gibraltar not used for commercial purposes would also be subject to transaction tax at the standard rate. On the other hand, commercial vessels imported to Gibraltar, as well as equipment incorporated into commercial vessels in Gibraltar, will be exempt from transaction tax in line with EU legislation which exists in relation to exemptions from EU VAT concerning commercial vessels.

Please refer to the responses provided to Questions B.8 and B.9 of HMGoG's FAQs published here.

Goods currently subject to reduced rates or exemptions from import duty will not be subject to reduced rates or exemptions from transaction tax unless they are specifically covered by the new regime.

Please refer to Articles 269 and 270 of the Treaty as well as HMGoG's Technical Notice of 2 February 2026.

To summarise:

1. The treaty will not apply to goods sold in Gibraltar prior to 15 July 2026, this being the expected date on which the treaty should enter into force.
2. The treaty will not apply to goods the movement of which starts before 15 July 2026 and arrive in Gibraltar on or after that date. What is key, therefore, for this transitional arrangement to apply, is for the transport or shipping of the goods to Gibraltar to start before this date. It will not be enough for goods to simply be ordered before this date. The burden of demonstrating that the movement started before this date will be on the operator. This may require, for instance, the production of consignment notes proving the date of dispatch, air way bills or bills of lading, carrier tracking logs etc.
3. Goods which were in a bonded warehouse or a temporary storage facility prior to 15 July 2026 can continue to remain there under the current Gibraltar legislation provided that the goods are discharged from the bonded warehouse within a period of 2 months after 15 July 2026 or the temporary storage ends within a period of 30 days after the goods were placed in temporary storage under existing Gibraltar legislation. The treaty shall, however, apply to the release for free circulation, discharge of the special procedure and any re-export from Gibraltar of such goods. The treaty will also apply where a trader wants to keep the goods in a warehouse after those periods.

EU customs duties will only apply to the goods forming part of the mixed consignment which are goods originating outside of the customs territory of the EU.

Goods which originate outside of the customs territory of the EU, or which originate outside of the UK in the case of goods exported from the UK, will have EU customs duty applied on those goods at the EU designated customs posts.

Yes. Goods which are of UK origin will benefit from zero tariff arrangements applying under the UK-EU Trade and Cooperation Agreement. To prove that the goods originate in the UK, operators will need to satisfy the rules of origin set out in that agreement. UK Government guidance on the application of those rules can be found here.

Please refer to the response provided to Question B.10 of HMGoG's FAQs published here.

Transaction tax will also apply to goods that are subject to excise duties. Transaction tax will be levied on the customs value of the goods including any excise duties attached to them.

Yes, investment gold, as defined in EU VAT legislation, will be exempt of transaction tax.

Goods which currently benefit from exemptions or reduced rates with respect to import duty will not be able to benefit from exemptions or reduced rates of transaction tax unless they qualify for an exemption or reduced rate of transaction tax. See further response to TAX-05 above.

With respect to goods which are covered by a certificate of exemption from import duty issued under Regulation 8, Part 3 of the Integrated Tariff Regulations 2017, HMGoG explained the position in its Technical Notice of 2 February 2026. To reiterate, any exemption granted under such a certificate will continue to apply for the duration of the certificate or for 3 months after the entry into force of the treaty, whichever is earlier. After those 3 months, any goods imported for projects covered by these certificates will be subject to the transaction tax upon import into Gibraltar.

With respect to goods currently supplied to government under long-term supply contracts, prices can be reviewed in accordance with the contractual terms of the contract awarded by government provided those terms allow for that (e.g. if the contract includes a price adjustment mechanism). Otherwise, where the government considers that the circumstances warrant a review of the contractual arrangements, it will seek to adopt an open and pragmatic approach to the reconsideration of particular commercial terms, provided always that doing so is compatible with applicable procurement law and would not require, for example, the commencement of a fresh procurement process.

The treaty prohibits the imposition of EU customs duties on products that are in free circulation in Gibraltar or the imposition of quantitative restrictions on the export of products from Gibraltar. That is already one significant advantage which trading partners with the EU typically have over third countries with no trade arrangements with the EU.

We also expect the goods and customs regime established under the treaty to facilitate the movement of products from Gibraltar to the EU, through the use of the new transit processes the treaty implements, as compared to the position today.

Focusing on the VAT issues, operators in Gibraltar should understand that, even with respect to trade between the EU Member States themselves, a destination principle generally applies to e-commerce whereby VAT is due in the EU Member State in which the customer is based as opposed to the EU Member State in which the seller is based. The same would apply to a sale from Gibraltar to, say, Germany. In such a case, transaction tax would not be charged but Germany VAT would need to be paid.

In the EU, VAT and excise duties are destination-based taxes. If goods are exported outside of the EU, they are not consumed in the EU market and can be sold without VAT and excise duties having to be levied on those goods.

Gibraltar transaction tax and excise duties will operate in a similar manner, and the treaty preserves for Gibraltar the possibility to apply exemptions from Gibraltar transaction tax and excise duties in respect of goods sold in "duty-free" shops at the airport and port to passengers departing to destinations outside the EU. This is on the basis that such goods will be immediately exported from Gibraltar and not consumed in either Gibraltar or the EU.

With respect to the specific questions:

1. There will be a duty-free area in Gibraltar airport for passengers boarding flights to non-EU destinations (e.g. the United Kingdom). This area will be the current one. If we were to have flights to Schengen destinations, a different departure lounge will be used for those departing flights.
2. The same will apply with respect to the Gibraltar port save that, in the case of the port, the Government will oblige operators to operate strict requirements with respect to proving that their onward destination is outside of the EU.
3. The ability to sell duty free will not only apply to excisable goods. It will apply to other goods too which would normally have been subject to transaction tax.

All products which qualify as "foodstuffs, (including beverages but excluding alcoholic beverages,) for human and animal consumption; live animals, seeds, plants and ingredients normally intended for use in the preparation of foodstuffs; products normally used to supplement foodstuffs or as a substitute for foodstuffs" as well as the "supply of water" will benefit from a super-reduced rate of transaction tax of 0%.