Post-Brexit Agreement on Gibraltar: Key Developments and Practical Implications

At a Glance

• Gibraltar will participate in the Schengen area for free movement purposes, with Spanish border officials carrying out Schengen entry checks in Gibraltar alongside Gibraltar border agents. This model will be similar to the current border control model used for the Eurostar in the UK and France.
• UK nationals visiting Gibraltar who are not resident will be subject to the Schengen 90/180-day limit. Businesses with mobile UK staff in Gibraltar or Spain may need to provide guidance to ensure compliance with Schengen rules.
• Businesses importing goods via Spain will need to adapt to Spanish customs procedures. This may involve engaging with customs brokers or updating documentation processes. Companies should assess whether existing routes and supply chains remain efficient under the new arrangements. 
• As Gibraltar increases its transaction tax in line with EU standards, retail pricing and margins — particularly in sectors reliant on low-tax advantages — may need to be reviewed. Businesses may wish to plan for gradual tax increases over the coming years.

On 11 June 2025, the United Kingdom and Spain, alongside the European Commission and the Government of Gibraltar, announced a political agreement on the future relationship between Gibraltar and the European Union. The deal marks a significant milestone in post-Brexit negotiations and provides a framework for Gibraltar’s continued access to the Schengen area, while explicitly preserving UK sovereignty and ensuring continued economic stability.

Following more than three years of negotiations, the agreement is designed to secure fluidity at the Gibraltar-Spain border, a key issue for the territory’s workforce and economy. We outline the key elements of the deal and its practical implications below. 

Key Features of the Gibraltar Agreement 

Border Controls and Movement of People

Under the terms of the agreement, Gibraltar will participate in the Schengen area for the purpose of free movement. Spanish border officials will carry out Schengen entry checks at Gibraltar’s airport and seaport, with Gibraltar’s own border agents present alongside. These controls will be juxtaposed — conducted prior to departure from Gibraltar — meaning there will be no physical checks at the land border with Spain. 

This approach mirrors the juxtaposed border control model used at London St Pancras and Paris Gare du Nord for the Eurostar, where both UK and French officials conduct exit and entry checks before travellers board. The result is seamless entry at the destination and the avoidance of additional border processing upon arrival. Applying this model to Gibraltar allows for the elimination of a hard border with Spain, preserving fluid movement for the approximately 15,000 daily cross-border commuters. 

Importantly, Gibraltar will not be part of the EU Customs Union or Common Commercial Policy, and will retain full autonomy over internal immigration decisions for non-Schengen nationals. 

Goods and Customs

Goods entering Gibraltar through Spain will be subject to Spanish customs controls, in a significant operational shift. Gibraltar has agreed to align aspects of its customs procedures and gradually increase its transaction tax (a local indirect tax) towards the EU’s minimum VAT levels. While Gibraltar will remain outside the EU customs union, this alignment is designed to maintain border fluidity and protect the EU internal market.

Goods arriving directly by sea or air — bypassing Spain — will continue under existing protocols, but businesses may face new documentation or custom compliance obligations depending on the point of entry. 

Sovereignty and Jurisdiction

The agreement makes clear that UK sovereignty over Gibraltar remains unchanged. The UK government has emphasised that Spain will have no jurisdiction over Gibraltar’s internal governance, immigration enforcement, law enforcement, judicial system or taxation. Spanish officials stationed at Gibraltar’s points of entry will act strictly within the scope of the Schengen border management and under operational protocols agreed upon with local authorities. 

While Spain continues to assert its historical claim over Gibraltar, this agreement does not engage with the sovereignty question. Instead, it provides a practical mechanism for cooperation while preserving each party’s legal position.

Implications for Businesses and Individuals 

Cross-border Commuting and Tourism

The juxtaposed controls should support frictionless movement between Gibraltar and Spain, benefiting employers who depend on cross-border workers and individuals commuting daily. The model avoids long waits or physical infrastructure at the frontier, ensuring a seamless flow. 

Customs and Trade 

Businesses importing goods via Spain will need to adapt to Spanish customs procedures. This may involve engaging with customs brokers or updating documentation processes. Companies should assess whether existing routes and supply chains remain efficient under the new arrangements. 

Tax and Pricing

As Gibraltar increases its transaction tax in line with EU standards, retail pricing and margins — particularly in sectors reliant on low-tax advantages — may need to be reviewed. Businesses may wish to plan for gradual tax increases over the coming years. 

Mobility and Residency

UK nationals visiting Gibraltar who are not resident will be subject to the Schengen 90/180-day limit. Businesses with mobile UK staff in Gibraltar or Spain may need to provide guidance to ensure compliance with Schengen rules.

Looking Ahead 

The political agreement now moves to the legal drafting and ratification phase, which will involve approval by the UK Parliament, the Spanish Cortes, the EU Council and the European Parliament. Ratification is expected to take several months, during which transitional arrangements will remain in place. 

We will continue to monitor the ratification process and provide updates as formal treaty documents become available.