Gibraltar transaction tax is a single-stage tax on goods. It replaced import duty on 15 July 2026, when the UK–EU treaty began to apply provisionally. HM Customs Gibraltar collects it when goods are imported, released from bond or leave a local production site for sale in Gibraltar. The standard rate is 15% in the first year and rises to at least 17% from the third. Reduced 5% and 0% rates apply to listed goods, and services are not taxed at all.
At a glance
| Item | Position as of October 2026 |
|---|---|
| Legal basis | UK–EU treaty; Treaty on Gibraltar and the European Union Act 2026 (Part 6, Chapter 4 and Schedule 2) |
| Start date | 15 July 2026, replacing import duty |
| Standard rate | 15% in year one, 16% in year two, at least 17% from year three |
| Other rates | 5% reduced and 0% super-reduced for listed goods |
| When charged | On import, on release from bond, or when locally made goods leave the production site |
| Who collects | HM Customs Gibraltar |
| Not covered | Services, restaurant meals, property sales, bunkering fuel and ship supplies |
What is Gibraltar transaction tax?
Before the treaty, Gibraltar charged import duty at rates that varied by product, and many goods paid nothing. Under the treaty’s customs union, Gibraltar agreed to tax goods placed on its market at rates linked to EU VAT. The aim is to stop Gibraltar becoming a cheap entry point for goods heading into Spain. The domestic law is the Treaty on Gibraltar and the European Union Act 2026. Its transaction tax chapter covers liability, rates, the persons liable, exemptions and refunds on exports.
The tax is charged once, at the point goods enter the local market. It is not added at each sale down the supply chain, and it is not charged at the till as a separate line. Gibraltar still has no VAT or general sales tax. The revenue stays with Gibraltar.
When did transaction tax start?
The tax was first planned for 10 April 2026, and some early guidance still shows that date. In the event, the treaty was signed on 14 July 2026 and applied provisionally from 15 July 2026. Transaction tax replaced import duty at midnight on that day.
Goods whose journey to Gibraltar began before 15 July 2026 are outside the new regime, but only if the importer can prove the dispatch date. Ordering or paying earlier is not enough. Gibraltar’s Government says goods released from bond after the start date are taxed on the customs value recorded when they first entered Gibraltar, not on their current market value.
What are the rates?
The treaty sets the structure, and its reduced and zero bands are drawn from the EU VAT Directive’s list of goods that member states may tax at lower rates.
| Band | Rate | Examples |
|---|---|---|
| Standard | 15% (year one), 16% (year two), at least 17% from year three | Most goods, including private and commercial vehicles and electronics |
| Reduced | 5% | Agricultural inputs, children’s clothing and footwear, child car seats, bicycles and e-bikes, listed art and antiques |
| Super-reduced | 0% | Food and non-alcoholic drinks, water, pharmaceuticals, medical equipment, books and newspapers, certain solar panels |
From the third year, the standard rate must be no lower than the lowest standard VAT rate in any EU member state, which is 17% as of October 2026. An independent body set up by Gibraltar and Spain monitors prices and may recommend changes. According to Technical Notice 72/2026, it can recommend a higher rate to correct distortions caused by the gap with Spanish VAT. It can also recommend a lower rate, but never more than two points below the lowest EU rate and never below 15%. Spain’s tax agency says that if Gibraltar does not follow a recommendation, Spain may apply its own VAT and excise to goods presented at customs for transport to Gibraltar.
How does transaction tax compare with Spanish VAT?
Spain’s standard VAT rate is 21%, so Gibraltar’s 15% standard rate is lower. The gap is meant to narrow as the rate rises. The two taxes also work differently:
- Stages. Spanish VAT is charged at every stage, and VAT-registered businesses reclaim the VAT they pay. Transaction tax is collected once, at entry to the Gibraltar market.
- Services. Spanish VAT covers most services; transaction tax covers none.
- Tax base. Transaction tax is calculated on the customs value of the goods plus duties and charges due on import, transport, insurance, packing and commission. Excise is included in the base, but transaction tax itself is not. Retail margins are not taxed.
Because the tax falls on the landed cost, not the shelf price, the effect on retail prices is usually less than the headline rate suggests. For household costs, see our guide to the cost of living in Gibraltar.
Which goods are exempt?
Several categories pay nothing or are kept outside the tax:
- Ship and aircraft supplies, including bunkering fuel, and goods not intended for sale in Gibraltar.
- Locally generated electricity, and the LNG used to produce it.
- Commercial vessels and equipment built into them. Private vessels not used commercially pay the standard rate; see owning a yacht through a company.
- Investment gold, as defined in EU VAT law.
- Goods under special customs procedures, such as customs warehousing, inward processing or temporary admission, until they are released to the Gibraltar market.
- Airport duty-free sales to passengers flying to non-EU destinations, which cover all goods, not only alcohol and tobacco.
Exemptions and reduced rates that existed under the old import duty do not carry over automatically. They apply only where the new regime specifically provides for them.
Who registers for and pays transaction tax?
HM Customs Gibraltar charges the tax when goods arrive, once the transit movement from the designated EU customs office has closed. In practice, the importer pays, either directly or through a customs agent. For goods made in Gibraltar, the tax falls due when they leave the production site, and for bonded goods when they are released to the local market.
The key registrations are customs ones. A business that lodges declarations and pays from its own account needs a Spanish tax identification number (NIF) and an EU EORI number. A business that uses a customs agent paying on its behalf does not. The goods, customs and border guide explains the transit process and how to register.
Whether your business must also hold a licence for its activity is a separate question; see Gibraltar business licences.
Can businesses recover transaction tax?
Not in the way VAT-registered businesses recover input VAT. As of October 2026, Gibraltar’s published guidance describes no general credit mechanism. For most businesses, transaction tax is simply part of the cost of the goods, so price your stock on landed cost. Your accountant can confirm how it is treated in your accounts and tax return.
There are three narrower routes:
- Exports. The Act provides for a refund of transaction tax where goods are exported from Gibraltar in commercial quantities. HM Customs Gibraltar or your customs agent can confirm the conditions and evidence required.
- Transitional refunds. Tax wrongly paid on goods that were already in transit before 15 July 2026 can be reclaimed through the clearing agent, with evidence of the dispatch date.
- The retail support deduction. Eligible retail and wholesale businesses can deduct from profits the amount by which transaction tax paid between 15 July and 12 October 2026 exceeded the import duty that would have been due. The deduction is capped and needs Office of Fair Trading certification. Businesses mainly selling groceries, tobacco, alcohol, fuel or vehicles are excluded, and it is an income tax deduction, not a cash refund.
How does it affect online sellers?
It depends on which direction the goods travel.
Gibraltar businesses selling to EU customers. Under the Government’s treaty FAQs, goods sold from Gibraltar to a consumer elsewhere in the EU do not bear transaction tax. The VAT of the customer’s member state applies instead, under the EU’s destination principle for e-commerce. Before selling into the EU, confirm with an adviser how you will account for that VAT.
Buying online into Gibraltar. Goods bought online are treated as commercial imports, however small the order, so they do not qualify for the personal-luggage allowances. Spanish retailers and delivery firms cannot use the open frontier to deliver to Gibraltar addresses with Spanish VAT added in place of customs clearance. Small traders who bring stock over from Spain are importers and must declare it.
Parcels by post. Post now travels overland through Spain. As of October 2026, the Royal Gibraltar Post Office’s published page on parcel charges still described the old import duty rules. Check current charges with the Post Office before relying on a value threshold.
What does it mean for visitors and residents?
Visitors shopping in Gibraltar do not pay a separate tax at the till. Transaction tax is already built into the price, and there is no VAT refund scheme to claim. Passengers flying to non-EU destinations can still buy duty-free at the airport.
People bringing goods into Gibraltar have personal allowances for the first three years: €300 per person by land and €430 by sea or air (€175 for children under 15). There are separate limits for tobacco, alcohol and fuel. Purchases made in Spain within those allowances carry Spanish VAT, which you cannot reclaim, but no transaction tax. After three years, the allowances are due to end for goods arriving from the EU, and travellers may bring any amount they can show is for personal use.
For the wider changes, see the UK–EU treaty explained for business or return to the Treaty 2026 hub.