"Today's agreement heralds a new era of tax transparency and cooperation between the EU and Switzerland. It is another blow against tax evaders, and another leap towards fairer taxation in Europe," European commissioner for economic and financial affairs Pierre Moscovici said in a statement.
Each country will now receive an on an annual update on the names, addresses, tax identification numbers and dates of birth of any residents with accounts in other countries, as well as other financial and account balance information.
"The automatic exchange of information is widely recognised as one of the most effective instruments for fighting tax evasion. It provides tax authorities with essential information about their residents' foreign income, so that they can assess and collect the taxes that are due on them," the statement said.
The agreement is not about tax harmonisation between countries, the EU stressed on its website: "It is merely about enabling member states, in an increasingly globalised environment, to ensure that all their taxpayers pay their fair share of the tax burden," it said.
The commission is currently concluding negotiations with Andorra, Liechtenstein, Monaco and San Marino regarding similar agreements, which are expected to be signed before the end of the year, the statement said.
In May 2014, the Swiss government joined Singapore in signing an international agreement sponsored by the OECD to end secrecy on clients.
In 2013, Switzerland agreed to sign a major international tax co-operation agreement, committing it to offer "mutual assistance" to over 50 developed and developing countries for the purposes of preventing tax evasion and avoidance.
Earlier that year, the UK's HM Revenue and Customs (HMRC) began sending letters to around 6,500 UK taxpayers who hold Swiss bank accounts. The letters were issued as part of an agreement between Switzerland and the UK in relation to undeclared Swiss bank accounts held by UK residents.
The letters gave the holders of these accounts six weeks to ensure compliance with UK tax laws, and advised those with irregularities to consider using the Liechtenstein Disclosure Facility (LDF), which allows those with UK tax irregularities to make a disclosure to HMRC on a voluntary basis in return for a reduced penalty, to settle their tax affairs. In the Budget in March, the chancellor announced that the disclosure period for the LDF would be shortened and will now end in December 2015 rather than April 2016.