Gibraltar, the last British colonial enclave in Europe, is set to join the Schengen zone in April, permitting unrestricted travel across its borders. This move is part of a new post-Brexit agreement with the European Union, mandating Gibraltar to comply with EU regulations while retaining its status as a British territory. The legal text of the agreement clarifies that the integration into Schengen does not affect the sovereignty claims over Gibraltar, which Spain still considers as its own territory.

Madrid acknowledges Gibraltar as a British Overseas Territory but insists on its own claim to sovereignty, emphasizing this through the implications of the new agreement. Notably, the agreement includes a sovereignty clause stating that the steps taken will not serve as a basis for any assertions regarding sovereignty over Gibraltar. Consequently, while the physical border with Spain will be removed, Gibraltar must harmonize its laws with the EU’s single market regulations and be subject to the jurisdiction of the European Court of Justice.

The practical effects of this agreement will be felt economically, most notably in terms of taxation. With the removal of the border, the prices of certain goods, including cigarettes and alcohol, are expected to rise as Gibraltar will now be obliged to apply minimum tax rates imposed by the EU. This development represents a significant shift in the relationship between Gibraltar and the EU, potentially influencing local businesses and trade.