THE now ratified tax treaty sorts out how workers who live in Spain pay their taxes while working in Gibraltar.
This international agreement on taxation was agreed between the governments and parliaments of Spain, UK and Gibraltar after the Brexit referendum.
It will replace the EU structure that allowed British citizens to work in Spain before the UK left the family of nations this year.
The Chief Minister Fabian Picardo signed a notice to amend the Gibraltar Income Tax Act on February 26.
The tax agreement will allow for information to be shared between Gibraltar, Spain and the UK.
A Joint Committee will allow disputes on residency and taxation issues to be solved through mutual cooperation.
“This is an important step forward in tax cooperation with our neighbours,” said Picardo.
“I trust it will be seen as undeniable evidence of Gibraltar’s commitment to transparency which is widely recognised internationally.
“We are ready to start the work of exchange of information that is provided for in the Treaty.”
This latest agreement is part of a raft of measures to remake a relationship with Spain that had become stagnant during years of right-wing Partido Popular government.
“We look forward to building strong institutional and inter- personal relationships with the relevant Spanish tax authorities in this field, as we have already done with tax authorities around the world,” added Picardo.
The tax agreement will mean everyone who lives more than 183 days a year in Spain will have to pay taxes there.
However, they will only have to pay the difference of the tax they already pay in Gibraltar, as opposed to being taxed twice.
This will benefit all cross-frontier workers who live in the Campo area but commute to work everyday.
It applies to Gibraltar-based companies as well as individuals, if those business take most of their income from Spain, have assets there or have company managers that live in Spain.