Minimum cigarette prices have risen by as much as 46% in Gibraltar as the territory begins aligning the cost of tobacco with neighbouring Spain.

The increases took effect immediately and affect all four categories of cigarettes sold on the Rock.

Premium brands have risen from a minimum of £4.20 to £5.44 per packet of 20 cigarettes, equivalent to an increase of 29.5%.

Mid-High cigarettes have recorded the largest rise, jumping by 46.3% from £3.20 to £4.68.

The minimum for Mid-Ordinary brands has increased by 23%, from £3 to £3.69, while Ordinary cigarettes have risen by 24.1%, from £2.70 to £3.35.

At current exchange rates, the new minimum prices range from approximately €3.93 to €6.39 per packet.

The increases form part of the new framework established by the agreement governing Gibraltar’s relationship with the EU.

The deal between the EU and UK was signed on July 14 and has been applied provisionally since July 15, 2026.

It includes measures intended to narrow the large difference between tobacco prices in Gibraltar and Spain, reducing the financial incentive for smuggling.

Under an administrative customs agreement between Spain and the UK, the tax-related price difference for cigarettes may not exceed €0.80 or 15% per packet compared with Spain, whichever produces the smaller gap.

Gibraltar will retain four market categories: Premium, Mid-High, Mid-Ordinary and Ordinary.

Its government must set a minimum price for each group, with updated figures and the classification of individual brands published every three months in the Gibraltar Gazette.

Gibraltar’s government said in its 2026 budget that cigarette prices would be adjusted in response to changes in Spanish prices and the pound-to-euro exchange rate.

This means minimum prices on the Rock could continue to change every quarter.

The new framework also introduces different excise-duty levels for each cigarette category, while Gibraltar’s transaction tax on tobacco stands at 15%.

The treaty includes further measures intended to combat the illicit tobacco trade between Gibraltar and Spain.

These include a tracking and tracing system equivalent to that used in the EU, greater information sharing on tobacco movements and closer cooperation between enforcement authorities.