Gibraltar is a member of the European Union (UE) by virtue of Article 227, paragraph 4 of the Treaty of Rome, which states that the provision of the Treaty “apply to the European territories for whose external relations a member state is responsible”. Gibraltar is therefore treated as part of the member state of the United Kingdom.


There are however certain areas of European policy from which Gibraltar is excluded:


The Common Agricultural and Fisheries Policy does not apply
VAT does not apply as Gibraltar is not in the Customs Union
Gibraltar is a third country for the common customs tariff
The European free movement of goods rules do not apply to Gibraltar


These derogations, in particular with regard to custom tariffs and VAT, enable Gibraltar to offer taxation advantages in many areas.