Proposed Framework for potential agreement with EU – VAT on goods in Gibraltar?

On 31st December 2020 a proposed framework was concluded with Spain for a potential agreement to govern the future relationship between Gibraltar and the European Union.  The intention is to negotiate and agree the terms by 30th June 2021.  The framework was set out in documents sent to the EU by the United Kingdom and Spain.  What appears to be the main document was leaked, and published by El Pais on 11th January.
Whilst there has been much focus on the possibility of Gibraltar effectively forming part of the Schengen area, the proposed framework also refers to the movement of goods, and in that context the possibility of being in a customs union and value added tax (“VAT”) on goods.  Whilst it may be premature to assume that VAT may be applied in Gibraltar, it is likely to be the subject of discussion over the next few months.
We explore some aspects of VAT and how it could foreseeably be applied in Gibraltar, based on the published framework document and standard EU rules – see our bulletin here.
Neil Rumford | Partner | Tax Services