Under the terms of the agreement reached this week, 12 of the 15 current EU member states will begin exchanging information on the savings interest of non-resident account holders in January 2005. Austria, Belgium, and Luxembourg will, at that time, impose a graduated withholding tax in place of information exchange, the level of which will be increased gradually to 35% in 2011.

It is expected that non-member countries, such as Switzerland, Liechtenstein, Monaco, Andorra, and San Marino will adopt equivalent measures within the same time frame.

Agreement was nearly reached on the long-running talks earlier this year, but the Italian government decided to make its support of the agreement dependent on concessions for Italian farmers being fined for breaching EU milk production quotas.

Under the new deal, the 24,000 farmers will now be permitted to pay their fines in yearly installments interest free for the next 14 years, meaning that they will pay a third less than if they had been obliged to pay at once.

'I am very happy that we managed to defend our national interests,' Italian Finance Minister, Giulio Tremonti commented earlier this week.