Gibraltar is to impose a 15% sales tax on goods under a Brexit deal, which will eventually see the British territory enter a customs union with the EU.
David Lammy’s ‘surrender’ deal includes Gibraltar introducing a 15% sales tax. (Image: Getty)
Gibraltar is to impose a 15% sales tax on goods to avoid competing unfairly with Spain, thanks to David Lammy‘s post-Brexit “surrender deal”. A senior European official said the British Overseas Territory agreed to a minimum 15% “transaction tax” on goods within three years of the Foreign Secretary’s agreement being ratified.
The “fluid border” agreement allows travellers to cross by land without checks. Those flying into Gibraltar from the UK will face one check from Gibraltarian officials and another by the Spanish on behalf of the EU. Talks on rules governing the border have been ongoing since Britain left the European Union in 2020.
Officials said a hard border would have been introduced under the EU‘s incoming exit and entry control system if no deal was reached. This would have caused delays for some 15,000 people who cross the border every day, as every individual passport would have been checked.
The senior European official told the Guardian the sales tax “was a big ask” for Gibraltar, which had “always claimed” the move would cause “a serious economic problem”.
Gibraltar is on course to join a customs union with the bloc under a further agreement. Brussels insisted the territory had to align its tax policies with the EU in order to enter into the trading arrangement.
Meanwhile, Mr Lammy on Thursday (June 12) urged MPs not to believe “fake news” surrounding the UK’s deal with the EU over Gibraltar’s border with Spain.
The Foreign Secretary was responding to reports of Gibraltar possibly joining the EU’s Schengen free travel area.
He told the Commons: “Ignore the fake news, Gibraltar will not be joining Schengen. This was never on the table. Immigration, policing and justice in Gibraltar will remain the responsibilities of Gibraltar’s authorities.
“For products entering Gibraltar across its land border, there will be a unique goods and customs model, avoiding the need for onerous checks at the border.”
Mr Lammy defended the deal, saying the Government was showing that a pragmatic, positive relationship with the European Union pays off for the British public.
Gibraltar was ceded to the UK by Spain in 1713, and the population is heavily in favour of remaining a British Overseas Territory.
The last time it voted on a proposal to share sovereignty with Spain, in 2002, almost 99% of Gibraltarians rejected the move.
