How does the 2026 UK/EU Treaty in relation to Gibraltar affect tariffs on goods traded between Gibraltar and the European Union?
Short answer
Since 15 July 2026 a customs union between Gibraltar and the EU has applied, under which goods produced in Gibraltar or the EU move between the two without customs duties or quotas. Goods from outside the EU, including goods from the UK, are charged the EU Common External Tariff when cleared at a Designated Customs Post, with the proceeds paid back to Gibraltar.
Detailed answer
The treaty creates a customs union between Gibraltar and the EU. Gibraltar does not join the EU Customs Territory; the two territories form a customs union with each other. Within that customs union, standard EU rules on the free movement of goods apply to goods produced in the EU and in Gibraltar, and no customs duties or quotas are charged on trade in those goods. Goods originating outside the EU are treated differently. They move under the T1 and T1GI transit procedures, and the Designated Customs Post applies the EU Common External Tariff. Unusually, the proceeds of those duties are paid back to Gibraltar. This is relevant to Gibraltar retailers and importers who source goods from the UK, which is outside the EU. Separately from tariffs, Gibraltar's former import duty has been replaced by a Transaction Tax on goods placed on the Gibraltar market, and excise duty applies to tobacco, alcohol and, after an initial three-year period, fuel. Goods placed on the market in Gibraltar must also comply with EU product standards, subject to transitional arrangements.