Thousands of Spanish cross-border workers travelling daily into Gibraltar could soon see a major boost to their take-home pay after Spain removes the Rock from its official list of tax havens.

The move is expected to directly benefit more than 11,000 Spanish workers who cross the border each day from the Campo de Gibraltar.

Under the planned change, many workers earning under €60,000 a year may no longer have to pay additional income tax in Spain on top of what they already pay in Gibraltar.

The change is expected to come into force once Spain’s tax agency officially removes Gibraltar from its list of ‘non-cooperative tax jurisdictions’, potentially within days.

Juan Franco welcomed the move, saying it could inject more money into the local economy around La Linea de la Concepcion.

‘We understand this is very positive news,’ he said.

‘It will mean disposable income increases immediately and will improve spending and consumption in our city.’

Until now, many people living in Spain but working in Gibraltar have faced a complicated tax situation.

Even though they already pay tax automatically from their salaries in Gibraltar, Spanish residents are still required to declare worldwide income to Spain’s tax authorities if they spend more than 183 days a year living in Spain.

Because Gibraltar has officially been treated by Spain as a ‘non-cooperative territory’, workers have not been able to access some of the tax exemptions normally available to people working abroad in countries with recognised tax agreements.

In simple terms, many workers have effectively been taxed less favourably than people commuting between other European countries such as Portugal or France.

For example, a worker living in La Linea and earning €25,000 a year in Gibraltar would already pay tax through deductions in Gibraltar.

But afterwards, they would also still need to complete a Spanish tax return and could sometimes end up paying extra money to Spain depending on the calculation.

Even workers earning relatively modest salaries of around €12,000 to €15,000 often still had to file declarations in Spain simply because the income came from Gibraltar.

Now, however, the situation will change dramatically.

Once Gibraltar is removed from the blacklist, many workers will be eligible for a major Spanish tax exemption covering up to €60,100 of foreign employment income.

That means somebody earning €25,000 a year in Gibraltar may no longer need to pay additional income tax in Spain at all, beyond potentially filing paperwork.

Even someone earning €50,000 annually could potentially remain exempt if all legal conditions are met.

Only higher earners or more complex tax situations would likely still face additional Spanish tax bills.

The change is expected to leave many households in the Campo de Gibraltar area with significantly more disposable income each month.

Local leaders believe that could have a major knock-on effect for shops, restaurants and businesses across southern Cadiz province.

Read more Andalucia news at the Spanish Eye.