Gibraltar reveals details of bespoke EU Treaty with border fluidity and trade access

Following the recent talks in Brussels on 11 June between UK Foreign Secretary David Lammy, European Commissioner Maroš Šefčovič, Spanish Foreign Minister José Manuel Albares and Gibraltar Chief Minister Fabian Picardos, Gibraltar's government has outlined the key provisions of its forthcoming treaty with the European Union, establishing a framework designed to maintain economic stability and border fluidity following Brexit.

The treaty includes explicit clauses protecting British sovereignty over Gibraltar. Neither the agreement nor any subsequent actions will affect the respective legal positions of the United Kingdom or Spain regarding sovereignty and jurisdiction over the territory. The government emphasised that no aspect of Gibraltar's land, territorial waters or airspace will be compromised under the new arrangements.

A common travel area will be established between Gibraltar and the Schengen Area, eliminating border checks at the land frontier for travel in both directions. All Gibraltar residents, regardless of their current identification card status, will benefit from unrestricted access to the Schengen Area without passport stamping requirements.

Gibraltar residents will be exempt from the EU's Entry Exit System and ETIAS requirements when they become operational. This exemption will apply whether travelling directly from Gibraltar or from third countries such as flights from London to European destinations.

Border crossing points will be established at Gibraltar's airport and port, with dual immigration controls performed locally. A Second Line Schengen Control Area will be constructed, straddling the Spain-Gibraltar border as a joint operating area for border guards from both territories.

While Gibraltar retains full authority to issue red identification cards and residence permits, the treaty requires consultation with Schengen states before issuing or renewing residence permits. This consultation process mirrors existing requirements between Schengen member states and aims to identify applicants who may pose security threats.

The treaty establishes free circulation of goods between Gibraltar and the EU Customs Union. All imports will be processed through designated EU customs points in La Línea and Algeciras, with goods entering free circulation in Gibraltar upon payment of a new transaction tax.

The transaction tax will replace the current import duty system but will not constitute VAT, as EU VAT rules will not apply in Gibraltar. The tax rate will not fall below the lowest VAT rate in any EU member state, currently 17% in Luxembourg. An escalator mechanism will gradually increase Gibraltar's rate to this level over several years.

Reduced rates will apply to essential goods: children's clothing at 5%, while foodstuffs, pharmaceuticals and medical equipment will be exempt. Special procedures will protect key economic sectors including bunkering, motor vehicles and ship supplies from transaction tax requirements.

Gibraltar traders will be able to purchase goods VAT-free from Spain and other EU countries, paying only the transaction tax upon import. Individual consumers will pay VAT on purchases in the EU without VAT refund eligibility.

Gibraltar businesses will gain unrestricted access to sell goods throughout the EU market without previous limitations, and customs duties will not apply when entering EU customs territory. The EU's Common Customs Tariff will apply to third-country goods, though UK-origin goods will remain exempt under existing EU-UK trade arrangements.

For the first time, Gibraltar Airport will be opened to commercial flights serving European Union destinations. This represents a significant expansion beyond previous arrangements that were limited to Spanish destinations only.

The treaty includes chapters covering environmental protection, climate change, labour standards, frontier workers and transport arrangements. Security cooperation will be enhanced through provisions on asylum applications, police cooperation with Europol and Eurojust, judicial cooperation, extradition processes and criminal record information exchange.

The government has established an email address (UKEUTreaty@gibraltar.gov.gi) to receive public queries about the agreement, which has already received nearly 1,000 messages. Officials are preparing detailed responses and a comprehensive FAQ document based on the most common questions received.

A more detailed parliamentary statement will be provided once the final treaty text is agreed and settled.