Does the customs union mean Gibraltar is joining the EU Customs Territory?
Short answer
No. The treaty creates a separate customs union between Gibraltar and the EU, made up of the EU customs territory and Gibraltar's own customs territory, which stays separate from the UK's. No customs duties apply to goods traded between Gibraltar and the EU, Gibraltar applies EU product rules, and it charges its own Transaction Tax in place of EU VAT.
Detailed answer
Gibraltar is not joining the EU Customs Territory. The Government of Gibraltar's technical notice explains that the treaty creates a customs union between the two territories. The Treaty on Gibraltar and the European Union Act 2026 implements it: the customs territory of the customs union comprises the customs territory of the EU, as defined in the Union Customs Code, and the customs territory of Gibraltar, which is separate from that of the UK. Within the customs union, the equivalent of standard EU rules on the free movement of goods applies. No customs duties or quotas apply to trade in goods produced in the EU or Gibraltar, or in non-EU goods once they are in free circulation in either territory. Gibraltar must also ensure that goods produced or placed on its market comply with EU product rules. Goods lawfully on the EU market are presumed compliant, and the Office of Fair Trading enforces these rules, with exemptions for some food, medicines for human use and medical devices imported for the GHA. Several things stay separate. Gibraltar charges its own Transaction Tax and excise duties, collected by HM Customs Gibraltar, in place of EU VAT, with a standard rate of 15% in the first year. Customs clearance for most goods takes place at EU designated customs posts in Spain, and goods move between those posts and Gibraltar under the special T1GI and T2GI transit procedures. EU duty collected at the posts on non-EU goods for Gibraltar is paid back to Gibraltar. Spanish customs treat goods in free circulation in Gibraltar as non-EU goods during the transition period, although no tariffs apply when they enter the EU. Gibraltar also remains a third country for the EU dual-use export regime. For traders, this means routing commercial imports through a designated customs post, paying Transaction Tax on arrival and selling only EU-compliant goods. Sales from Gibraltar to EU customers bear VAT in the customer's country, with no Transaction Tax. For shoppers, travellers' allowances apply for the first three years: goods worth up to the equivalent of EUR 300 by land, or EUR 430 by air or sea, plus limits on tobacco and alcohol. After that, there are no thresholds for personal goods brought from the EU into Gibraltar.