The EU and Switzerland inked a landmark deal on Wednesday (27 May) aimed aimed at clamping down on banking secrecy and preventing EU citizens from hiding undeclared cash in Swiss bank accounts.

Under the agreement signed by EU economics commissioner Pierre Moscovici, and by the Swiss State Secretary for International Financial Matters, Jacques de Watteville, both sides will automatically exchange information on the financial accounts of each other's residents from 2018.

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The names, addresses, tax identification numbers and dates of birth of residents with accounts in Switzerland will be passed to national authorities, as well as other financial and account balance information.

The agreement “heralds a new era of tax transparency and cooperation between the EU and Switzerland,” said Moscovici in a statement, adding that “the agreement deals another blow against tax evaders and represents another leap towards fairer taxation in Europe”.

The European Commission claims that €1 trillion in possible tax revenue is lost each year across the bloc as a result of tax evasion. In March it tabled plans to beef up the information exchange between EU governments by imposing automatic exchange of information on tax rulings and requiring national authorities to send each quarterly reports on tax policy.

The agreement, which is consistent with the recently agreed global standard on automatic information exchange struck by the Paris-based OECD think-tank and G20 finance ministers, “should not only improve Member States' ability to track down and tackle tax evaders, but it should also act as a deterrent against hiding income and assets abroad to evade taxes,” the Commission argues.

The EU executive is currently concluding negotiations for similar agreements with fellow tax havens Andorra, Liechtenstein, Monaco and San Marino, which are expected to be signed by the end of 2015, but an agreement with Switzerland has long been viewed as the most significant.

Switzerland is keen to improve its image on tax policy and has also opened legal investigations into allegations that a Swiss subsidiary of the British banking giant HSBC helped clients avoid paying millions in taxes by hiding their money in secret Swiss accounts, exploiting loopholes in the EU’s 2003 savings tax directive.

The EU and Switzerland negotiated an agreement on the taxation of savings in 2014.