This page used to tell you a carton of 200 Marlboro Gold cost 25 to 30 pounds in Gibraltar. As of 1 October 2026 that is below the legal minimum, and we are correcting it here rather than quietly deleting it. Gibraltar changed on 15 July 2026, when the treaty with the EU began to apply. The headline most shopping pages still run, that Gibraltar is a tax free rock where everything is half price, was always an exaggeration and is now wrong in specific, checkable ways. What follows is the version built on figures somebody is legally accountable for. There is no VAT in Gibraltar. That part is true and has not changed. What has changed is what sits in its place. Since the treaty began to apply there is a transaction tax, and the Government's [technical notice on the customs union](https://www.gibraltar.gov.gi/press-releases/technical-notice-basic-features-of-the-customs-union-between-gibraltar-and-the-eu-722026-11670) sets it at 15 per cent in the first year, 16 per cent in the second and 17 per cent from the third. That is still below Spain's 21 per cent IVA and the United Kingdom's 20 per cent VAT, so the gap is real. It is 5 or 6 percentage points, not the 21 per cent that pages written before July imply, and it narrows each year by design. Excise duties apply to exactly three things: tobacco, fuel and alcohol. Everything else carries the transaction tax and nothing more. Food, water, medicines, medical equipment and books are zero rated, which is the part of the Gibraltar tax position that nobody puts in a shopping guide and the part that most affects what a week here costs. Gibraltar has not joined the EU customs territory. It formed a customs union with the EU, which is a different arrangement, and the practical consequence is that goods allowances at the frontier still exist even though the passport checks do not. Gibraltar sets minimum retail prices for four cigarette categories, publishes them in the Gibraltar Gazette and reclassifies individual brands every three months. The set that took effect on 1 October 2026 raised the floors by between 23 and 46 per cent, [as GBC reported](https://www.gbc.gi/news/retail-tobacco-prices-rise-by-23-46-per-pack-of-20-sept). The notices are published quarterly on the [Laws of Gibraltar site](https://www.gibraltarlaws.gov.gi/legislations). | Category | Minimum per 20, before | Minimum per 20, from 1 October 2026 | Ten packets, our arithmetic | | Ordinary | 2.70 GBP | 3.35 GBP | 33.50 GBP | | Mid Ordinary | 3.00 GBP | 3.69 GBP | 36.90 GBP | | Mid High | 3.20 GBP | 4.68 GBP | 46.80 GBP | | Premium | 4.20 GBP | 5.44 GBP | 54.40 GBP | The last column is ours, not the Gazette's. The floor is set per packet of 20, so 200 cigarettes is ten floors and cannot legally be sold for less. A premium brand carton therefore cannot go below 54.40 GBP, which is roughly double the figure this page carried in April and roughly double the figure most other Gibraltar pages still carry. There is a second mechanism that matters more than the price rise. The technical notice sets a retail price differential against Spain: Gibraltar cigarettes may undercut the equivalent Spanish price by 0.80 EUR per pack or 15 per cent, whichever is the smaller number. Gibraltar is still cheaper. It is now legally prevented from being much cheaper, so the old half price claim cannot come back. > Tobacco was the reason most people came. That reason has not been removed, it has been capped, and a cap written into a treaty is harder to undo than a tax rate. Spirits carry excise and transaction tax, so they moved too, but the structural advantage against a British or Spanish high street survives. A litre bottle bought here is competing with a UK shelf price that includes 20 per cent VAT plus UK spirits duty. Compare the specific bottle rather than assuming a percentage. Perfume and cosmetics are the better case and always were. Fragrance carries no excise at all, only the 15 per cent transaction tax, against 21 per cent in Spain and 20 per cent in the United Kingdom. There is no duty component to complicate it, so the saving is close to the tax difference and it holds across the range. That is the honest version of what used to be a claim of 20 to 30 per cent off. Some lines are discounted more than the tax gap, some less, and the only way to know is to check the price you would pay at home first. Anyone quoting a flat percentage for a whole category is guessing. This page previously said a 5,000 pound watch saves you 1,000 pounds in VAT compared with UK retail. That was the 20 per cent VAT calculation, and it no longer describes the position, because transaction tax at 15 per cent now applies to the Gibraltar price. The difference is the gap between the two rates, not the whole of UK VAT. On high value items that gap is still worth travelling for, and it is the single purchase where a trip can pay for itself several times over. It is simply not the figure the old paragraph gave. [The Red House](https://theredhous