At midnight on 15 July, large crowds gathered at Spain’s border with Gibraltar to watch as a checkpoint was finally torn down. The fence, which had divided the British overseas territory from Spain since 1908, was removed as part of a post-Brexit agreement between the UK and the EU.

When the UK exited the EU in 2020, Gibraltar was deliberately left out of scope of the Trade and Cooperation Agreement between London and Brussels. It was agreed that specific provisions for Gibraltar – which was now outside both the EU and the Schengen free movement area – would be addressed in separate negotiations.

The agreement still requires ratification under the UK’s Constitutional Reform and Governance Act 2010, as well as formal adoption by the European Council and the consent of the European Parliament. Nonetheless, the UK government says the treaty will help bring ‘fluidity for people and goods crossing the Gibraltar-Spain border to support economic growth and jobs in the region.’ Around 15,000 people – over half of Gibraltar’s overall workforce – cross the border from Spain each day to attend their place of employment.

Catherine Barnard, Professor of European Law at the University of Cambridge, says the removal of border checks will be particularly significant for Spanish workers. ‘The hold-ups on the border have been really problematic,’ she says. ‘The most important aspect of the treaty is to make it much easier for Spanish nationals to come into Gibraltar and, to a lesser extent, Gibraltarians into Spain. This is particularly important for the hospitality sector in Gibraltar.’

Although the treaty removes physical border controls at the frontier, it doesn’t formally change Gibraltar’s Schengen status. This means that Schengen border checks will be applied at both Gibraltar’s air and sea ports.

The treaty also establishes a Gibraltar-EU customs union, which removes tariffs, duties and quotas on goods moving directly between the territory and Spain. The EU already has similar customs unions in place with Turkey, Andorra and San Marino.

The agreement further introduces a 15 per cent transaction tax on the sale of goods to avoid unfair competition with Spain. This will affect duties on cigarettes, petrol and other products that Spaniards have historically crossed the border to buy in Gibraltar. According to Lasry, most Gibraltarians accept this is a price to pay for removing the more onerous border checks. The changes will present a challenge for businesses supplying such goods, ‘but there’s always going to be winners and losers,’ he says. ‘We all understand that if we want to come closer to our neighbours, we need to harmonise things a little bit more.’

Notably, the tax will not apply to services, including remote gambling – a key industry for Gibraltar, alongside insurance, crypto funds and other financial services. Gibraltar is home to around 40 licensed gaming operators, employing some 3,000 staff. However, the scarcity and sheer cost of housing in Gibraltar means many of these workers travel in from Spain every day. For this reason, gaming is one of the industries set to benefit ‘most directly’ from the new fluidity of movement, Lasry says.

However, the agreement leaves the situation less clear for UK nationals who travel to Gibraltar for work, says Barnard. ‘Resolving the Schengen issues is significant, but, for those coming from the UK, they will [now] be subject to checks going into part of UK territory,’ she says. ‘I’m surprised this has not attracted more attention.’

Gibraltar’s government has dismissed social media rumours that UK citizens could fly to the territory as a means of ‘circumventing visa or immigration requirements.’ It said that holders of UK passports would ‘remain subject to the relevant entry requirements and immigration checks.’

Authorities on both sides of the border are still adjusting to the new custom requirements. In late July, documentation issues on the Spanish side delayed deliveries of food and medication into the territory. ‘I would expect it to become a functional customs union, so these are probably teething problems as far as Gibraltar is concerned,’ says Yves Melin, Co-Chair of the IBA International Trade and Customs Law Committee. ‘It’s a matter of making it work now. It should remove all controls on goods between Gibraltar and Spain and also the rest of the EU. Any intra-EU movements with Gibraltar should also now become a lot easier.’

Lasry grew up in New York but has lived in Gibraltar for decades and holds both a UK and an American passport. Previously he had to carry a passport with him when crossing the border into Spain. He says he still has to remind himself it’s no longer needed.

For Gibraltarians who grew up with the border, however, it may take more time to adjust psychologically to the new rules. For these people, ‘it was a real border that had to be crossed and in theory [the authorities] could say “no, you can’t come across”,’ says Lasry. ‘So, this really is a big deal.’

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