Jasmine Faudone (Dublin City University)
A few minutes after midnight on 15 July 2026, the first pedestrians and vehicles crossed between La Línea de la Concepción and Gibraltar without undergoing any checks. The night before, in Brussels, the EU-UK Agreement in respect of Gibraltar had been formally signed by Commissioner Maroš Šefčovič and UK Minister for Europe Stephen Doughty, in the presence of Spanish Foreign Minister José Manuel Albares and Gibraltar’s Chief Minister Fabian Picardo, who greeted the opening of the frontier hours later with the words ‘Europe is back’. When I commented on the political agreement of June 2025 on this blog, the text of the Agreement could not yet be read, and I concluded that it remained to be seen how it would translate into legal terms. Now, one year later, that question can be answered: the treaty has been signed, published, and is now provisionally applied. This post examines what the legal text actually does, and why it matters.
From political statement to legal text
The path from the June 2025 announcement to the operational treaty was completed in stages. The legal text was finalised in December 2025 and published on 26 February 2026. On 4 March 2026, the Gibraltar Parliament unanimously passed a motion requesting that the United Kingdom ratify the Agreement, and at the end of March it adopted the necessary implementing legislation. On the EU side, the Council agreed on the decisions on signature and provisional application in April. The choice of provisional application was driven largely by the calendar: the roll-out of the EU’s automated Entry/Exit System would otherwise have required Spain to impose biometric checks at the land frontier, which would have hardened precisely the border the Agreement was designed to open. Ratification remains pending on both sides: the European Parliament’s consent is still required, and in the United Kingdom the treaty must complete the parliamentary scrutiny procedure under the Constitutional Reform and Governance Act 2010. Notably, no UK implementing legislation was needed, because the treaty’s obligations operate within Gibraltar’s own legal order, and Gibraltar has already legislated.
The dismantling of the land border
The Agreement’s most visible achievement concerns the movement of persons. Articles 7 and 28 require the removal of all physical barriers at the land border. In practice, this obligation has meant dismantling approximately 1.2 kilometres of fencing. For the roughly 15,000 workers who cross the frontier every day, many of them from the Campo de Gibraltar, the change is immediate and tangible: no checks at all. Yet Gibraltar has not joined the Schengen area: the Preamble expressly acknowledges that Gibraltar ‘does not participate in and is not associated to the Schengen acquis’ (recital 6).
Article 29(1) requires the United Kingdom, in respect of Gibraltar, and the Kingdom of Spain to set up border crossing points at Gibraltar port and airport, and Article 29(2) subjects all passengers entering Gibraltar through the port or airport to border checks at those points. The checks follow the sequence laid down in Article 29(5): on entry, they are carried out first by the Gibraltar authorities and subsequently by the competent authorities of the Kingdom of Spain, which perform the functions required to exercise border control as set out in the Schengen Borders Code (Article 33(1)); on exit, the order is reversed. Under Article 29(7), the entry conditions required under Gibraltar law and under Union law are cumulative, and Gibraltar undertakes to align its entry conditions to those applicable under Union law. Article 30(1), in turn, provides that persons may circulate between Gibraltar and the Member States that apply the Schengen acquis in full without border checks, irrespective of their nationality. Article 30(2) provides the safeguard: border controls between Gibraltar and the Member States may be exceptionally reinstated, for an initial period of up to ten days, extendable to a maximum of six months, in case of serious threat to public policy, public health or internal security, and only as a last resort.
Two further elements complete the regime. Under Article 31, Gibraltar’s competent authorities have no access to information systems and databases established under Union law; the Spanish authorities, by contrast, conduct their checks with full access to those systems. Title III then lays down safeguards for persons resident in Gibraltar: they cannot be prevented from entering Gibraltar, even if they do not fulfil the Schengen entry conditions (Article 43), and they are exempt from the Entry/Exit System and the ETIAS travel authorisation requirement (Article 42). The result is a territory that formally remains outside the Schengen area while being treated, for the purposes of border management and circulation, as if it were within it.
Sovereignty: the red line crossed
None of this would have been possible without resolving the question that had paralysed the negotiations. Throughout the Brexit process, the presence of Spanish law enforcement on Gibraltar’s territory was considered a non-negotiable red line: Gibraltar had argued that the Schengen checks should be carried out not by Spain but by Frontex, the EU border agency. That red line has now, evidently, been crossed, and the price of crossing it is written into the treaty itself. Article 2 provides that the Agreement, and any measures taken under it, shall be without prejudice to the respective legal positions of the United Kingdom and the Kingdom of Spain with regard to sovereignty and jurisdiction, and shall not constitute the basis for any assertion or denial of sovereignty. The Government of Gibraltar also obtained legal opinions confirming that sovereignty over the Rock remains unaffected. The parties have thus managed to separate the question of sovereignty, which remains untouched, from the practical management of the border. That separation is what made the solution possible.
An Agreement for economic prosperity
The June 2025 political statement merely envisaged an agreement aimed at economic prosperity in the region. Part Three of the treaty, addressing Economy and Trade, aims to achieve it. Trade in goods between the Union and Gibraltar is free of customs duties and quotas in both directions, and all physical barriers to the movement of goods by land are removed (Article 246). Gibraltar is defined as a customs territory separate from that of the United Kingdom (Article 241), a notable inversion for a territory that remained outside the (then Community) customs territory throughout its forty-seven years of membership. Customs formalities, however, do not disappear: like the controls on persons, they are relocated. Clearance for goods imported into or exported from Gibraltar takes place at Designated Customs Posts situated within the EU, Algeciras, La Línea, Sagunto and one office in Portugal, after which goods move to Gibraltar under a dedicated transit procedure (T2GI for EU-origin goods; T1GI for non-EU-origin goods) within the EU’s computerised transit system (NCTS). Goods placed on the Gibraltar market must comply with EU product rules (Article 256, Title II Chapter 3), with a presumption of compliance for goods lawfully marketed in a Member State. The Union and the United Kingdom, in respect of Gibraltar, are also bound by a non-discrimination principle on taxation of each other’s goods (Article 245).
On indirect taxation, Gibraltar does not adopt VAT; it has never had one, and the treaty does not impose it. Import duties are replaced by a Transaction Tax on goods (Article 248), at a transitional standard rate of 15%, rising to 16% in the second year and, from the third year, aligning with the lowest standard VAT rate applied in the EU (currently 17%). The Transaction Tax is reduced (5%), and zero rates apply to categories of essential goods defined by reference to the EU VAT framework, set out in Annex 24. Excise duties apply to tobacco, alcohol and fuel (Article 248(3), Title II Chapter 4 on Tobacco; Annex 24): EU minimum rates apply to tobacco and alcohol from the outset, with a retail price differential mechanism for cigarettes, and all excise rates must come within 6% of the equivalent Spanish rates within three years. An independent body will monitor prices and market distortions between Gibraltar and the Campo de Gibraltar, with the power to recommend rate adjustments, and a safeguard mechanism applies in case of persistent non-compliance. These arrangements build upon the 2021 International Agreement on Taxation between Spain and the United Kingdom regarding Gibraltar, which had already established a framework of cooperation and transparency in tax matters.
A living arrangement, not a settled one
Perhaps the most distinctive feature of the treaty is its architecture. Gibraltar must implement, in its domestic law, a defined body of EU rules, with equivalent measures, including their future amendments and replacements (Article 19). If it fails to do so within the prescribed time limits, the Agreement is terminated automatically, unless the Cooperation Council decides otherwise (Article 19). A separate mechanism provides for termination following an evaluation of the border provisions (Article 66), and either party may in any event terminate the Agreement with twelve months’ notice, mirroring the general clause of the Trade and Cooperation Agreement (Article 334). This is not a settlement carved in stone: it is a living arrangement whose survival depends on continued alignment and continued political will, on both sides of the border.
External differentiation, confirmed
Seen in a broader perspective, the Gibraltar treaty confirms a pattern that runs through the entire Brexit settlement. Where withdrawal met a contested territory, Northern Ireland, the Sovereign Base Areas in Cyprus, and now, definitively, Gibraltar, a clean break from EU law proved impossible. In each case, EU law survives or returns in a residual, selective, territorially differentiated form, extended beyond the Union’s borders by negotiated instruments rather than by membership. Gibraltar’s case is perhaps the most striking: a territory that left the EU in 2020 now applies Schengen border rules at its airport, participates in a customs union with the EU, and aligns dynamically with a defined body of the acquis. Withdrawal did not erase EU law from these borders; it transformed how it applies.
The hope I expressed in June 2025, that the interests of the territory would prevail over the conflict, has, for now, been borne out. Whether it continues to be will depend less on the treaty’s text, now finally readable, than on the political will that must sustain it.
Jasmine Faudone is a PhD Candidate in the School of Law and Government at Dublin City University. Her research interests include Brexit in Northern Ireland, Gibraltar and Cyprus, European citizenship and freedom of movement of persons, migration law, European internal market law, and generally European public Law.