Because taxes and other levies do not apply to cigarettes in Gibraltar, gangs have been smuggling them to Spain in small dinghies hoping to make a fast profit.  

This has created a flourishing black market that has become an irritant in UK-Spain relations as Gibraltar remains in limbo following Brexit, with Madrid pushing for greater tobacco controls as part of any new deal over the territory’s ties with the EU, reports the Financial Times.
“Tobacco is not a problem in the colony,” Lisardo Capote, head of the customs surveillance service in the Spanish region neighbouring Gibraltar, told the Financial Times, referring to Gibraltar. “It is a source of funding. The problems it creates are on this side of the fence.”
Capote says that Spain is missing out on around EUR 40 million in import duties each year due to the smuggling problem.
“In one night there can be between six and nine boats, normally working in a co-ordinated way,” he said. “We try to chase them down, to seize the tobacco, to arrest the suspected criminals. But it’s a very risky activity.”
Gibraltar’s government, on the other side, says that it is not turning a blind eye to tobacco smugglers and says Spain “grossly” overestimates the volumes they trade, reports the Financial Times.