The European Union and Switzerland have signed a major accord to end banking secrecy for EU residents and prevent them from stashing undeclared income in Swiss banks.
The European Commission has said the move, which comes into play from 2018, was a “deterrent” against hiding income abroad.
“This new transparency 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 EU Commission said.
The Commission is also negotiating similar agreements with Andorra, Liechtenstein and Monaco.
EU commissioner Pierre Moscovici said that the agreed automatic exchange of information was “another blow against tax evaders and (represents) another leap towards fairer taxation in Europe”.
It follows an agreement for “strengthened transparency” made between EU member states last year.
Under the accord, information – including each account holder’s name, address, tax identification number, date of birth and bank balance – is to be provided yearly.
European countries in recent years have beefed up their fight against tax evasion and fraud, which saps billions from national budgets every year.
The European Commission also wants to crack down on sweetheart tax deals favouring multinational corporations such as those exposed by last year’s “LuxLeaks” scandal
Some of the world’s biggest companies – including Pepsi and Ikea – have enjoyed tax rates as low as one percent thanks to the secret pacts with tax authorities in Luxembourg.