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Has a hopeful new dawn for change and prosperity in Gibraltar finally arrived or is the agreement reached on the territory of Gibraltar merely another round of empty political promises?
In an article we published last year entitled Recent Negotiations on Gibraltar Border Controls Post Brexit: A False Dawn? we spoke about a new wave of political meetings and negotiation work between the EU, the UK and Spain regarding an agreement over the disputed territory of Gibraltar. Finally, over a year later, after a brief meeting between European Commissioner Maroš Šefčovič, Spanish Minister for Foreign Affairs José Manuel Albares and UK Foreign Secretary David Lammy, together with the Chief Minister of Gibraltar, Fabian Picardo on the 11th of June 2025 a political agreement outlining the key political aspects of a deal on Gibraltar was reached.
This agreement comes at an interesting time for UK-EU relations, as it was just a few weeks ago in May that a summit took place reviewing some key points of their relationship (details about this can be found here), and undertakes to bring legal security and certainty to the situation without compromising the British sovereignty of Gibraltar, which has been a sticking point throughout all previous negotiations, especially given the controversial status of the area.
The Joint Statement released as a result of the meeting and the subsequent agreement between the parties puts a particular emphasis on ‘prosperity’ (a term repeated three times throughout the one-page document) to be fostered by (i) removing physical barriers, and (ii) significantly reducing and changing checks on persons and goods in and out of the territory.
The Fence
Since its construction in 1909 carried out by the UK the 7-foot high, 0.75-mile fence that runs the length of the border between Gibraltar and La Línea de la Concepción (the neighbouring Spanish municipality) has been a constant stumbling block for both the UK and Spain. It has had quite a chequered past too as first it was seen by Spain as a way for the UK to annex a further 106 of the original 156 hectares of neutral ground that lay between the territories, and then in 1969 it was closed completely by order of Francisco Franco in response to the Gibraltar Constitution Order 1969 and would remain closed for more than 13 years thereafter until it was gradually reopened from 1982 in preparation for Spain joining the European Community. As a result, the plans to get rid of the Fence under this new agreement will no doubt come as welcome news to many as it not only pragmatically facilitates Gibraltar’s incorporation into the EU’s Schengen Area – a commitment made back in 2020 – but is also sign of progress towards the strengthening of relations between the UK and Spain with regards to Gibraltar by doing away with this needless hard border and all that it has historically come to represent.
Movement of people
The removal of the Fence and the subsequent re-integration of Gibraltar into the EU’s Schengen area will have a particularly positive effect for those who must cross the border every day. It is estimated that around 15000 people cross the border every day, the vast majority of these people being Spanish workers that go to Gibraltar for work. In the current situation these people must undergo border checks upon entry and exit of Gibraltar which can involve lengthy queues and delays at times and ultimately seems like an unnecessary hassle, especially given these crossings happen on a daily basis.
On the other hand, the relaxing of this land border evidently has knock-on effects on the checks carried out at the port and airport of Gibraltar and has, so far, been a somewhat contentious issue. As soon as Once Gibraltar is considered part of the Schengen area once again it will be necessary to carry out dual border checks at these other two points of entry into the territory: the usual checks carried out by the Gibraltarian authorities, and then, further to this, new checks for the Schengen area to be carried out by Spanish authorities. Whilst this has been compared to the presence of French authorities in St. Pancras Station for the Eurostar service, it will no doubt be strange to see Spanish agents at the border of what is still a British territory. One ramification of such a system will be that British citizens who have exceeded their 90-day Schengen allowance will no longer be able to enter the territory of Gibraltar– certainly a fringe case but it will ruffle some feathers about the precedent this may set moving forward.
Movement of goods
The treatment of goods going through or into Gibraltar is the other area of focus of the Joint Statement. Whilst it has attracted less media attention on the whole when compared to the movement of people, it arguably implies a much more intricate balance to be struck between the parties. The main development is the promise of a future customs union to be established between the EU and Gibraltar, presumably something in line with those that exist between the EU and microstates like Andorra and San Marino. Further to this and as part of preparations for such a customs union both parties will endeavour to work cooperatively to converge their customs policies by removing checks on goods going through the region as well as reviewing taxation. Only a few days after the meeting and the release of the Joint Statement Gibraltar reportedly agreed to apply a 15% sales tax on goods, reportedly dubbed a ‘transaction tax’ on goods within three years of ratification of this agreement. This will align Gibraltar’s import duty rate to no lower than the lowest of Europe, which at the moment is Luxembourg with 17%, given that the initial 15% rate is apparently set to rise by 1% each year for a subsequent two years as from the aforementioned date of ratification. This seems to contradict the stance taken by the UK’s foreign minister David Lammy, who told the British parliament that Gibraltar “will not be applying VAT and will maintain its fiscal sovereignty”, and raises broader questions around prolonged discordance between messaging from the UK and Gibraltar on these sorts of issues.
“It seems as though Gibraltar is slipping even further from Britain’s clutches” – This closing statement in our previous article is more relevant than ever here, as this new agreement seeks to facilitate relations with the EU and Spain, but inevitably distances Gibraltar legally and fiscally from the U.K.
As is clear from this brief summary there are still many details pertaining to the wider legal implications of these proposals, and it will be interesting to see how they will take form both in the future treaty and also in the legislation itself of each of the relevant parties; as only then will we be able to get a clear view of how this agreement may really affect Gibraltar and UK-EU and UK-Spanish relations more generally.
Oliver Hobson
Vilá Abogados
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