The Spanish foreign minister announced on Thursday that Madrid and London had reached an initial agreement over Gibraltar's post-Brexit status.
"With this (agreement), the fence is removed, Schengen is applied to Gibraltar... it allows for the lifting of controls between Gibraltar and Spain," Foreign Minister Arancha Gonzalez Laya told reporters.
According to Gonzalez, Gibraltar, a British Overseas Territory located at the southern tip of Spain, will remain part of European Union agreements such as the Schengen area.
Commenting on the deal, the UK's Foreign Secretary Dominic Raab said that Britain remained in support of Gibraltar's sovereignty and is committed to mitigating the impact of Britain's full exit from the EU.
"We remain steadfast in our support for Gibraltar and its sovereignty. All sides are committed to mitigating the effects of the end of the Transition Period on Gibraltar, and in particular ensure border fluidity, which is clearly in the best interests of the people living on both sides," Raab said.
The United Kingdom and the European Union came to an agreement on the terms of their future relationship on 24 December, which included a comprehensive free-trade deal and a range of other agreements concerning matters including migration.
The status of Gibraltar was not included in the Brexit deal.
On Wednesday, Boris Johnson, the Prime Minister of the United Kingdom, signed off on the post-Brexit future partnership agreement that was supported by a vote of 521 to 73 in the House of Commons earlier that day.