On 30 June 2026, Royal Decree-Law 18/2026 of 29 June was published in the Spanish Official Gazette (BOE), introducing a number of measures under the Comprehensive Response Plan to the Middle East Crisis.
This new legislation extends, on a gradual and conditional basis, certain measures previously introduced by Royal Decree-Law 7/2026 of 20 March, with the aim of mitigating the impact of the current geopolitical crisis on energy markets and avoiding an abrupt withdrawal of the tax relief measures benefiting households, businesses and sectors particularly exposed to rising energy costs.
In particular, Royal Decree-Law 18/2026 establishes a phased withdrawal of the temporary tax reductions applicable to certain energy products, introduces safeguard mechanisms allowing the temporary reinstatement of the reduced VAT and Electricity Excise Duty rates in the event of significant increases in the Consumer Price Index (CPI), and, most notably, amends the tax rate applicable to the Tax on the Value of Electricity Production (IVPEE), setting it at 3.5% for 2027 and 0% with effect from 1 January 2028 on an indefinite basis.
The main tax measures introduced by the Royal Decree-Law are summarised below:
- Hydrocarbons Excise Duty: Gradual Reduction of Tax Rates
With respect to Hydrocarbons Excise Duty, the new legislation provides for a temporary reduction in the tax rates applicable to the most widely consumed fuel products, particularly diesel and unleaded petrol.
The reduction will apply progressively during July, August and September 2026 as follows:
- EUR 0.15 per litre during July 2026.
- EUR 0.10 per litre during August 2026.
- EUR 0.05 per litre during September 2026.
The Royal Decree-Law also includes a safeguard mechanism should the CPI for petrol or diesel increase significantly. In such circumstances, the tax reductions could be increased to as much as EUR 0.20 per litre during August or September, depending on the evolution of the relevant CPI indices.
For the remaining energy products falling within the scope of Hydrocarbons Excise Duty, whose tax rates had already been reduced under Royal Decree-Law 7/2026, the new legislation provides for a gradual return to the standard tax rates, while also allowing for enhanced reductions should exceptional CPI increases occur.
- VAT on Electricity, Natural Gas, Biomass and Firewood
Royal Decree-Law 7/2026 had temporarily reduced the VAT rate from 21% to 10% on certain supplies, imports and intra-Community acquisitions of energy products.
Royal Decree-Law 18/2026 does not automatically extend this reduced rate beyond June. Instead, it introduces a safeguard mechanism allowing the temporary reinstatement of the 10% VAT rate during August and September 2026 if the CPI for the relevant energy products shows an unfavourable evolution.
Where the relevant conditions are met, the 10% VAT rate may apply to:
- Supplies, imports and intra-Community acquisitions of electricity made to customers with a contracted capacity of up to 10 kW.
- Electricity supplies to recipients of the Spanish social electricity bonus qualifying as severely vulnerable consumers or consumers at risk of social exclusion.
- Supplies, imports and intra-Community acquisitions of natural gas.
- Biomass briquettes and pellets.
The application of the reduced VAT rate is conditional upon the CPI for the relevant category (electricity or natural gas, as applicable) exceeding by more than 15% the CPI recorded in the same month of the previous year.
- Electricity Excise Duty
Royal Decree-Law 7/2026 had temporarily reduced the Electricity Excise Duty rate from 5.11269632% to 0.5%, while maintaining compliance with the minimum taxation levels required under EU legislation.
Royal Decree-Law 18/2026 introduces an equivalent safeguard mechanism for August and September 2026. Accordingly, where the CPI for electricity exceeds by more than 15% the CPI for the corresponding month of the previous year, the Electricity Excise Duty rate will be reduced to 0.5% for the relevant month.
However, the resulting tax liability may not fall below:
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- EUR 0.5 per MWh where electricity is used for industrial purposes, by vessels moored in port (other than private pleasure craft), or for railway transport.
- EUR 1 per MWh in all other cases.
- Electricity Production Tax (IVPEE): New Rules for 2026 and Progressive Reduction of the Tax Rate
One of the most significant developments introduced by the Royal Decree-Law concerns the Tax on the Value of Electricity Production (IVPEE).
For fiscal year 2026, the legislation introduces new rules for calculating both the taxable base and the advance payments of the tax. In particular, the following amounts will be excluded from the taxable base:
- 30% of the remuneration received from electricity generation and injection into the grid during the third quarter of 2026.
- 40% of the remuneration received during the fourth quarter of 2026.
These measures are in addition to those already applicable to the first and second quarters of 2026 under Royal Decree-Law 7/2026.
Furthermore, the Royal Decree-Law amends Law 15/2012 on Tax Measures for Energy Sustainability by introducing a progressive reduction of the IVPEE tax rate:
- 5% for fiscal year 2027.
- 0% from fiscal year 2028 onwards.
This amendment represents a structural change in the taxation of electricity generation by establishing a 3.5% tax rate for 2027 and a 0% rate with effect from 1 January 2028 on an indefinite basis. The legislation also provides for an update of the remuneration parameters applicable to renewable energy, cogeneration and waste-to-energy installations in order to reflect this amendment.
- Public Information Requirements
The Royal Decree-Law also introduces obligations for fuel stations and other retail fuel suppliers to provide appropriate information to customers regarding the temporary energy tax measures.
These requirements aim to ensure that consumers are properly informed of the applicable tax reductions and to enhance transparency regarding the pass-through of those reductions into final retail prices.
- Recommended Actions
In light of the new regulatory framework, businesses should consider taking the following actions:
- Assess the impact of the gradual reduction in Hydrocarbons Excise Duty on supply costs and pricing policies.
- Determine whether they may benefit from the conditional application of the reduced VAT and Electricity Excise Duty rates during August and September 2026.
- Review the impact of the new IVPEE taxable base and advance payment calculation rules for fiscal year 2026.
- Assess the implications of the reduction of the IVPEE rate to 3.5% in 2027 and to 0% from 2028 onwards.
- Review energy supply agreements, hedging arrangements and forward pricing mechanisms in light of the IVPEE reform.
- Ensure compliance with any applicable transparency and information obligations relating to the temporary energy tax measures.
How can we assist you?
We recommend reviewing the impact of these measures on your company’s energy tax position, including their effect on supply agreements, invoicing procedures and internal energy cost monitoring processes.
With more than 30 years’ experience in indirect taxation, Salinas & Partners remains at your disposal should you require any further information or assistance.
On 13 May 2026, the Court of Justice of the European Union (CJEU) delivered its judgment in Case C-603/24, addressing a request for a preliminary ruling concerning the interpretation of Article 2(1) of the Sixth VAT Directive in relation to supplies of services for consideration.
The CJEU examined whether certain transfer pricing adjustments made between companies within the General Motors group, intended to ensure predetermined profit margins, could be regarded as consideration for vehicle repair services subject to VAT.
The dispute arose between Stellantis Portugal, S.A., the successor company to Opel Portugal (formerly General Motors Portugal – “GMP”), and the Portuguese Tax Authorities. GMP operated in Portugal as part of the General Motors group, which included, among others, companies engaged in the manufacture and supply of motor vehicles, parts and accessories to other group entities.
When vehicles presented manufacturing defects, issues covered by the manufacturer’s warranty, or roadside assistance-related problems, customers brought them to dealerships. The dealerships carried out the repairs and invoiced GMP for the related costs, charging the applicable VAT.
The dispute originated from a tax audit relating to the 2006 financial year, during which the Portuguese Tax Authorities took the view that certain transfer pricing adjustments made between GMP and the group’s manufacturing entities actually constituted remuneration for VATable vehicle repair services. This conclusion was reached even though the adjustments took into account not only repair costs but also other costs incurred by GMP in the course of its distribution activities, such as personnel, electricity and marketing expenses.
Under an intragroup agreement entered into in 2004, the transfer prices of vehicles, parts and accessories could be adjusted at the end of each period to ensure that the distribution entities achieved a predetermined profit margin. These adjustments were implemented through credit notes where GMP’s profit fell below the agreed margin and through debit notes where its profit exceeded the target margin.
The key issue was whether the inclusion of repair costs in the calculation of the transfer pricing adjustments was sufficient to conclude that GMP had supplied repair services to the group’s manufacturing entities and that such adjustments constituted consideration for those services.
Resolving this issue was crucial because the Portuguese Tax Authorities considered that repair costs arising from manufacturing defects, manufacturer warranties or roadside assistance obligations should ultimately be borne by the manufacturers. According to their interpretation, GMP initially incurred those costs and subsequently recharged them to the manufacturers through the transfer pricing adjustments. On that basis, the authorities concluded that GMP had supplied repair services subject to VAT and assessed additional VAT and compensatory interest amounting to EUR 1,504,215.49.
The CJEU recalled that, for a supply of services to be subject to VAT, there must be a legal relationship between the parties involving reciprocal performance, such that the remuneration received constitutes the actual consideration for a specific service supplied to the recipient.
In the case at hand, the intragroup agreement was intended to ensure that GMP achieved a predetermined profit margin through transfer pricing adjustments, but it did not establish any specific obligation on GMP to provide repair services to the manufacturers in exchange for remuneration. Furthermore, repair costs were only one of the elements taken into account in calculating the adjustment, alongside other general operating expenses. Accordingly, the CJEU held that the connection between the repairs and the transfer pricing adjustments was merely indirect and that those adjustments could not automatically be regarded as consideration for VATable repair services.
Nevertheless, the CJEU left the final assessment of the facts to the national court. It will be for the Portuguese court to determine whether, independently of the transfer pricing agreement, there existed a legal relationship allowing the identification of a specific supply of services directly linked to a corresponding remuneration, in which case the adjustment could be subject to VAT.
The judgment also leaves open an important practical issue. Where a transfer pricing adjustment does not constitute remuneration for an independent supply of services, it may be necessary to assess whether it should instead be treated as a subsequent adjustment to the purchase price of the vehicles, potentially affecting the taxable amount of the original supplies.
How can we assist you?
With more than 30 years of experience in indirect taxation, customs and international trade, Salinas & Partners is available to assist you in assessing the VAT and customs implications of transfer pricing adjustments, as well as in defending tax assessments arising from the characterization of such adjustments as VATable supplies of services.
On 3 June 2026, the General Court of the European Union delivered its judgment in Case T-198/25, G Kft., addressing a request for a preliminary ruling concerning the interpretation of Articles 167, 168, 179, 180, 183, 250 and 252 of the VAT Directive, as well as the principles of effectiveness, fiscal neutrality and proportionality, in the context of the regularisation of VAT incorrectly invoiced in respect of a period already closed by a tax audit.
The General Court examined whether EU law precludes national legislation that limits the possibility of regularising VAT incorrectly invoiced where the period concerned has already been subject to a tax audit, unless the taxable person provides a new element capable of altering the conclusions reached in that audit.
The dispute arose between G Kft., a Hungarian company engaged in the rental of reusable crates and pallets to fruit producers, retailers, wholesalers and food processing companies, and the Appeals Directorate of the Hungarian National Tax and Customs Administration.
The controversy arose because the company had invoiced VAT on certain deposits linked to the delivery of those goods, even though it was subsequently considered that those transactions did not fall within the scope of VAT. Specifically, G Kft. applied a deposit system under which, when delivering the crates and pallets to its customers, it invoiced certain amounts intended to encourage the return of the goods within the prescribed period. If the customer returned only part of the goods, the relevant invoices were adjusted; if all the goods were returned, the invoices were cancelled. However, those invoices included VAT, although the Hungarian authorities subsequently considered that those deposit transactions should not have been subject to that tax.
Following the opening and completion of a tax audit relating to the period from January 2015 to July 2017, the company requested, in November 2020, the opening of a new audit in order to regularise the VAT incorrectly invoiced. The Hungarian tax authority refused that request on two occasions, taking the view that there was no new fact or circumstance, as required under national law in order to reopen a period already closed by a tax audit.
A Hungarian court referred a question to the General Court for a preliminary ruling in order to determine whether the VAT Directive and the principles of effectiveness, fiscal neutrality and proportionality preclude national legislation that makes the regularisation of VAT incorrectly invoiced in respect of a period already audited conditional upon the existence of a new element capable of altering the conclusions of the previous audit.
For its part, G Kft. argued that the VAT had been incorrectly invoiced and paid, and that there was therefore no loss to the tax authority. However, the Hungarian authorities considered that the company had had the opportunity to correct its position earlier, whether before the tax audit began, during the audit procedure itself, or by challenging the decision that brought that procedure to an end in August 2018.
The Court concluded that the VAT Directive and the principles of effectiveness, fiscal neutrality and proportionality do not preclude national legislation of this kind, provided that the taxable person has been able effectively to exercise its right to regularisation within a reasonable period. In this regard, the Court considered it relevant that G Kft. had had more than three years in which to request the regularisation of the VAT: before the opening of the tax audit, during the audit procedure itself and, subsequently, through a possible appeal against the decision that brought that audit to an end. Accordingly, the Court held that the refusal to open a new tax audit did not amount to an absolute and disproportionate denial of the right to regularise the VAT, but rather to the application of a procedural rule that is permissible from the perspective of EU law.
Consequently, the General Court confirmed that a taxable person who has incorrectly invoiced VAT may request its regularisation, but that such right must be exercised in accordance with the procedural rules and time limits laid down by national law. Where the period has already been closed by a tax audit, the Member State may require the existence of a new element in order to reopen it, provided that the taxable person had previously had a genuine and reasonable opportunity to correct its position.
How can we assist you?
With more than 30 years of experience in tax advisory services, Salinas & Partners is available to assist you with the review of transactions subject to VAT, the regularisation of amounts incorrectly invoiced, the preparation of corrective invoices and the assessment of risks arising from tax audits that have already been closed.
On 21 March 2026, Royal Decree-Law 7/2026 of 20 March (ratified on 26 March) was published in the Official State Gazette, approving the Comprehensive Plan to Address the Crisis in the Middle East, which includes, amongst other measures, various tax measures aimed at mitigating the impact of rising prices for energy and electricity products resulting from the international energy crisis.
The main measures approved in this Royal Decree in relation to the Excise Duty on Hydrocarbons, the Excise Duty on Electricity and Value Added Tax are detailed below.
- Reduction of Hydrocarbon Excise Duty rates
The Hydrocarbon Excise Duty rates applicable to the main energy products are reduced, bringing them to the minimum levels permitted by Directive 2003/96/EC restructuring the EU Community framework for the taxation of energy products and electricity.
This reduction applies, amongst others, to products such as leaded and unleaded petrol, general-purpose diesel, fuel oil, LPG, natural gas, kerosene and biofuels.
- Reduction in the rates of the Excise Duty on Electricity
The Royal Decree-Law establishes a reduction in the rate of the Excise Duty on Electricity, which is lowered from the general rate of 5.11269632% to 0.5%. However, minimum rates of €0.50 per megawatt-hour are set for industrial uses, agricultural irrigation, rail transport and certain vessels, and €1.00 per megawatt-hour for all other cases.
In addition, reductions are introduced in the tax base for the Tax on the Value of Electricity Production for the 2026 financial year, to offset the costs being borne by companies. These reductions will be implemented by reducing the tax base by a percentage of the revenue corresponding to the electricity fed into the system during the first two quarters of the year, with the aim of reducing electricity generation costs and promoting more competitive prices in the wholesale market, which are expected to result in lower electricity prices for the end consumer.
- Reduction in VAT rates on certain energy products
In the area of Value Added Tax, the VAT rate applicable to supplies, imports and intra-Community acquisitions of goods relating to electricity supplied to contract holders with a contracted power of less than 10 kW, electricity supplied to beneficiaries of the social tariff who are classified as severely vulnerable or severely vulnerable at risk of social exclusion, natural gas, briquettes and pellets derived from biomass, firewood, petrol, diesel and biofuels intended for use as motor fuels.
- Key dates
All these measures are temporary in nature and come into force from their publication in the Official State Gazette (21 March 2026) until 30 June 2026. However, as these are exceptional measures, their application is subject to the change in the CPI during the month of April; therefore, if the change in the CPI for these products does not exceed that of the same month of the previous year by more than 15%, the reduction will cease to apply in June 2026.
How can we assist you?
Our team of specialists in indirect taxation and excise duties can advise you on analysing the impact of these measures, the correct application of the new tax rates and compliance with the tax obligations arising from the new regulations.
Salinas & Partners, with over 30 years’ experience in excise duties and VAT, is at your disposal to answer any queries you may have.
The Spanish 2026 Annual Tax and Customs Control Plan was published on 12 March (Official State Gazette, Resolution of 11 March), setting out the lines of action and strategies to be implemented by the Tax Agency during the 2026 financial year for the effective application of the state tax and customs system.
In this briefing, we highlight the main actions to be undertaken, both to prevent and to correct tax irregularities in the areas of customs and indirect taxation.
Notwithstanding the above, by way of introduction, we consider it relevant to highlight the following actions:
- Corrective self-assessments and prevention of non-compliance:
We will continue to promote the use of corrective self-assessments for the main taxes, facilitating voluntary regularisation by taxpayers and reducing administrative burdens. - Electronic invoicing and invoicing systems:
During 2026, progress will be made on the regulation and implementation of mandatory electronic invoicing between businesses and professionals, as well as on the information and support strategy associated with the Public Electronic Invoicing Solution. Furthermore, the Tax Agency will continue to promote the implementation of systems derived from the VERI*FACTU Regulation, including the submission, consultation and download of invoicing records, the QR code verification system on invoices, and the availability of a free invoicing app for businesses and professionals with simple invoicing processes - Civic and tax education and simplification of language:
Training initiatives will continue to be developed in both schools and universities to encourage voluntary compliance with tax obligations. Furthermore, the Administration will continue to work on simplifying the documents issued, particularly in relation to VAT and Corporation Tax penalty procedures, with the aim of facilitating voluntary compliance with tax obligations.
Below, we identify the risk profiles and list the control activities that will be subject to verification during the 2026 financial year, in the areas of customs and indirect taxation:
Customs
- Greater control over e-commerce, particularly following the removal of the €150 customs duty exemption, with a particular focus on digital platforms and distance sales of imported goods.
- Digitisation and modernisation of customs clearance.
- There will be greater control over imports, particularly in cases of fraud such as the undervaluation of goods or the abuse of VAT exemptions, requiring payment or a guarantee of duties prior to release.
- Controls on customs suspensive procedures, particularly transit, are being strengthened to prevent the irregular introduction of goods into the territory of the European Union.
- International cooperation is being promoted, mainly with neighbouring countries and bodies such as the European Anti-Fraud Office (OLAF), to improve the fight against fraud and compliance with international sanctions.
- Customs surveillance operations will be stepped up, with particular focus on drug trafficking (cocaine and hashish), money laundering and the use of new financial methods such as neobanks.
- Specific investigations into customs and environmental fraud are being carried out, including the control of illegal imports of fluorinated greenhouse gases.
VAT
- Voluntary compliance by taxpayers will be encouraged through the use of the Pre303 system, which enables the detection of discrepancies between accounting records and submitted self-assessments, facilitating their rectification via amended self-assessments.
- There will be a greater number of checks to verify that taxpayers registered in the Register of Intra-Community Operators, the Monthly Refund Register and the Register of Tax Warehouse Operators continue to meet the required criteria, as a key measure for preventing tax risk.
- The tax authorities will tighten controls on VAT-exempt imports where goods are destined for other Member States, paying particular attention to the undervaluation of goods and requiring payment or a guarantee of duties before authorising release.
- Measures to combat irregular invoicing are being stepped up through the use of IT tools designed to detect fraud networks, including shell companies or dormant entities that issue fictitious invoices to simulate business activity and obtain undue refunds or illegal deductions.
- Coordination in the fight against organised VAT fraud schemes is being strengthened, both at national and intra-Community level, with particular attention to the vehicle sector and to registration and transfer processes.
- Controls on capital goods will be strengthened, and checks will be carried out to ensure that there are no changes in their destination or use that would render the VAT deduction inapplicable, as well as to prevent the use of intermediary companies to obtain undue deductions.
- Administrative coordination in the application of the special one-stop shop schemes (OSS and IOSS) is being improved, strengthening European cooperation in the fight against VAT fraud.
- Specific measures are being taken to control the misuse of the reduced VAT rate on services that include relevant supplies.
- In the hydrocarbons sector, additional measures are introduced to ensure VAT is paid before products leave tax warehouses, including new records, stricter requirements for operators and the attribution of liability to the owners of such warehouses in the event of non-compliance.
Excise and environmental duties
- There will be greater control over excise duties linked to foreign trade (hydrocarbons, alcohol, tobacco), as well as products linked to the suspension regime or those with tax benefits.
- Surveillance of factories, warehouses and tax warehouses will be stepped up to prevent their use in fraud schemes, particularly in operations relating to VAT or in international schemes that conceal the diversion of goods.
- There will be greater scrutiny of the lawful possession of hydrocarbons, particularly at service stations and transport companies, with special attention paid to cases of product adulteration or purchases from unauthorised operators.
- Supervision of hydrocarbon tax refunds arising from the professional use of diesel will be strengthened, in order to prevent the improper application of tax benefits.
- Products subject to Alcohol and Alcoholic Beverages Tax will be subject to greater control, particularly those linked to the suspension regime or with tax benefits, verifying their correct classification and the proper application of exemptions and refunds.
- An obligation is established to ensure the payment of VAT before hydrocarbons leave tax warehouses, requiring its payment or a guarantee in advance. This measure is supported by the REDEF system, which monitors authorised operators, and strengthens the responsibility of tax warehouse keepers, with the aim of preventing fraud and ensuring tax collection.
- Controls are being strengthened over the import, export and intra-Community movements of tobacco products, the investigation of smuggling and the monitoring of raw tobacco movements to detect possible illegal factories, as well as over the new excise duty applicable to e-cigarettes and related products.
- There will be an increase in investigations into environmental taxes, including the control of illegal imports of fluorinated gases, in collaboration with other agencies and police forces.
How can we assist you?
We recommend proactively ensuring tax compliance in domestic and international transactions with tax implications, and in particular those for which the Tax Agency anticipates imminent audit proceedings.
Salinas & Partners, with over 30 years’ experience in indirect taxation and in preventive and corrective audit procedures, is at your disposal for any queries or comments you may have.
Regulation (EU) 2026/382, published on 18 of February 2026, amends Regulation (EC) No 1186/2009 to remove the import duty exemption applicable to direct shipments from third countries to recipients in the EU where the total intrinsic value does not exceed €150 (a “threshold-based” exemption), as it was considered to encourage abuse through undervaluation and artificial splitting of consignments in an already digitised customs environment.
The main changes introduced by this Regulation are detailed below:
1) The €150 customs duty exemption (import duties) is abolished
- The tariff exemption for shipments up to €150 is abolished: from the date of application, these shipments will be subject to customs duties when imported into the EU (although during a transitional period some cases will have a simplified fixed amount).
- The abolition is justified by the strong growth of e-commerce (and low-value shipments), the difficulty of customs control and the misuse of the €150 threshold (e.g. undervaluation or splitting shipments), which no longer makes sense with the digitisation and availability of electronic data on imports.
2) Transitional measure: Single payment from 1 July 2026 to 1 July 2028 in specific cases
From 1 July 2026 to 1 July 2028, a single customs duty of €3 per item is established for shipments whose total intrinsic value does not exceed €150, only when:
- the import is exempt from VAT in accordance with Article 143.1.c bis) of Directive 2006/112/EC (in practice, transactions linked to the IOSS regime), or
- the goods are in postal consignments.
3) Evaluation clauses and possible extension/renewal
- By 1 October 2026 at the latest, and monthly thereafter, the Commission will assess whether there is any diversion of trade flows (e.g. to avoid the single duty). If it detects any, it may propose to extend the transitional measure to cover all goods in consignments ≤€150.
- By 1 December 2027 at the latest, the Commission will assess whether the centralised EU IT infrastructure will be ready by 1 July 2028; if not, it may propose to extend the transitional measure.
4) Key dates
The Regulation will enter into force 20 days after its publication, i.e. on 10 March 2026, and will apply from 1 July 2026; it also provides for a transitional period from 1 July 2026 to 1 July 2028.
5) Recommendations and action points
- B2C e-commerce and online sales platforms: review prices, customer information (possible import charges) and the purchase/payment process, especially for low-value orders (≤150).
- IOSS strategy: for eligible operators, the transitional period may involve simplified tariff treatment (€3/item), as opposed to the full application of the common customs tariff for non-IOSS operators.
- Customs and internal systems: adjust processes and IT systems to be able to submit import declarations and calculate/apply customs duties correctly.
- Monitoring 2027–2028: there may be an extension if the EU’s centralised IT systems are not ready by 1/07/2028, so it is advisable to prepare alternatives and review the impact on costs and operations.
How can we assist you?
Our team of customs and international trade specialists can assist you in reviewing your import processes and adapting to the abolition of the exemption for shipments up to €150, as well as analysing the impact on costs, prices and clearance times (including the transitional period) and coordinating with customs agents, logistics operators and technology providers.
Salinas & Partners, with extensive experience in customs regulations and indirect taxation, is at your disposal to answer any questions you may have about the changes introduced by Regulation (EU) 2026/382 and its practical application.
On 17 February 2026, a historic agreement was approved between the European Union (EU) and the United Kingdom regarding Gibraltar, which is expected to enter into force provisionally on 15 July 2026. This agreement will thus complete the legal framework for relations between the EU and the United Kingdom established by the Trade and Cooperation Agreement in force since 2021.
By way of summary, we consider it relevant to outline the changes that this agreement will entail in the areas of customs and indirect taxation:
Customs
- This agreement establishes a customs union between the European Union and Gibraltar, meaning that this territory will become part of the common customs territory. Consequently, goods will be able to move between the EU and Gibraltar without being subject to customs duties or quantitative restrictions.
- Despite this customs union, as long as Gibraltar retains its status as a ‘third territory’, customs and control formalities will apply to the movement of goods within this union. These formalities must be carried out at a designated customs point (DCP) in La Línea de la Concepción (a branch office is also established at Gibraltar Airport), Sagunto or Algeciras. Finally, there will be another in Portugal for situations where the Spanish DCPs are inoperative.
- Generally speaking, within the framework of this union, goods may only enter and leave Gibraltar by land, although the following exceptions are established where entry and/or exit by sea is permitted:
- Supply operations at the port and airport of Gibraltar.
- Completion of special procedures.
- Transport by sea from Algeciras to Gibraltar (less than 2 hours) is permitted under the T2GI transit procedure, provided that the goods are unloaded in full in Gibraltar.
- Furthermore, the movement of goods between the territories of this union must be documented by means of a declaration, code T2GI or T1GI (transit), depending on the procedure under which they are placed.
- The Agreement establishes a system of joint supervision between the EU and Gibraltar through compliance checks, including checks on the documentation of goods, ships, aircraft and travellers, as well as specific checks on special customs procedures. Furthermore, the Union’s authorities will have real-time access to Gibraltar’s customs systems.
- Operators exchanging goods between the EU and Gibraltar under the mandatory transit procedure must provide a guarantee to the relevant customs authority for the amount of the potential customs debt represented by the goods exchanged.
- For the purposes of the previous paragraph, the main actions to be taken by operators are:
- They must point out and declare a representative in Gibraltar within the guarantee, including surname, first name, company name and full address, for the guarantee to be valid for the operations.
- They must formally request the amendment of their existing authorisations for transit operations so that these can also be used for transactions with Gibraltar.
- With regard to the guarantees provided, two situations can be distinguished:
If operators already have a prior guarantee, a new one will not be necessary provided that its scope is extended to cover operations with Gibraltar; this extension may be carried out by means of an addendum.
If a new guarantee is provided, it must comply with the models set out in the IA UCC.
Transaction tax
- Gibraltar will introduce a single-stage indirect tax known as the “transaction tax”, which will be levied on imports, production, unauthorised entry, and goods carried in travellers’ luggage in excess of the allowances provided for travellers.
- The rate of the “transaction tax” may not be lower than the lowest VAT rate applied by an EU Member State, currently 17% in Luxembourg. This rate will be reached following a three-year adjustment period, with 15% applied in the first year, 16% in the second, and 17% or the lowest rate applicable at that time.
- Gibraltar may set reduced and super-reduced rates of the tax.
- In the case of the reduced rate, this may not be lower than 5% and will apply, amongst other things, to agricultural products, plants, clothing, bicycles and works of art.
- The super-reduced rate established in the agreement will be 0% for food products, water supply, pharmaceutical products, medical and healthcare equipment, amongst other products.
Excise Duties
- The excise duties to be implemented in Gibraltar shall be those provided for in the harmonised regulations of the European Union, and the minimum tax rates set out therein must be applied; under no circumstances may taxes lower than those set in said regulations be applied.
- Following provisional entry into force and within a three-year transition period from the date of entry into force of the Agreement, tax rates must be brought into line with those applied in Spain, such that they may not differ by more than six percentage points from those applied in Spain or must be equivalent to at least 94% of the Spanish rates.
- Petroleum products and tobacco are exempt from this general rule; in the case of petroleum products, the rates applicable in Spain must be reached three years after the entry into force of the Agreement. With regard to tobacco, the minimum rates provided for in EU legislation shall apply, and in the case of cigarettes, these may not differ excessively from the retail prices in Spain.
- The United Kingdom, in relation to Gibraltar, must establish a traceability system similar to that of the EU from the entry into force of the Agreement for cigarettes and rolling tobacco. For other tobacco-related products, this must be established within 24 months.
- The United Kingdom will also adopt measures such as the quarterly exchange of information and cooperation with the EU in the fight against smuggling to improve the monitoring of tobacco.
- Both parties are obliged to provide information at the request of the other party within 24 hours of the request.
- Requirements equivalent to those of the EU must be applied regarding product warnings, the prohibition of oral tobacco and distance sales, and the destruction of seized tobacco.
In addition, there are plans to set up an independent advisory body known as an ‘observatory’, which will be responsible for reviewing annually whether differences in tax rates are causing distortions in consumption, and may propose that Gibraltar adjust its tax rates by raising or lowering them.
How can we assist you?
We recommend that traders carry out a review of their trade relations with Gibraltar in order to comply with the formalities required under this Agreement, particularly regarding customs, transit and guarantees, as well as the new tax obligations arising from its implementation.
Salinas & Partners, with over 30 years’ experience in international trade and customs, are at your disposal for any queries or comments you may have.
On 17 March, the Tax and Customs Control Plan was published (BOE Resolution of 27 February), which sets out the lines of action and strategies to be carried out by the Tax Agency in 2025 for the effective application of the State tax and customs system
The latest Official Gazette publications have introduced several tax reforms affecting Value Added Tax (VAT) and Excise Duties (IIEE), particularly as they directly affect the management of fuels, diesel and biofuels.
