Germany and Switzerland are reported to have agreed to stop spying on each other.

According to Swiss paper Tages Anzeiger and the German Süddeutsche Zeitung the countries signed a memorandum of understanding in January.

The Local reported that the two countries will inform each other if they intend to carry out clandestine crime surveillance operations on their neighbour’s territory.

Only two weeks ago a Swiss man was arrested by the German authorities for espionage.

It was later disclosed that he was working for the Swiss intelligence services. His task was to uncover German tax investigators who had bought CDs holding information about people holding bank accounts in tax havens - including Switzerland.

Three German tax investigators were later charged with breaching Swiss banking laws.

The methods used to crack down on alleged tax cheats led to tension between the two countries.

Investigators from EU countries have long been keen to get information about alleged tax dodgers with accounts in Switzerland.

Such cloak and dagger methods are no longer thought to be necessary with Switzerland agreeing to disclose information about tax accounts held by foreigners.

Neither country was prepared to comment on the reported no-spying agreement.