Leaders of the European Union (EU) member states on Thursday reached an agreement on strengthening EU rules on taxation of savings income.

"This is indispensable for enabling the member states to better clamp down on tax fraud and tax evasion," said European Council President Herman Van Rompuy in his statement following the adoption of the agreement.

The new adopted agreement follows up on the May 2013 European Council's strategy to fight tax fraud and tax evasion. Effective tax systems are seen by EU as fundamental elements of well-functioning social market economies, and for providing social justice.

"This is a clear message that Europe is fully committed to the new single global standard for automatic exchange of tax information," said Van Rompuy.

The amendments to the savings tax directive are intended to prevent its circumvention, reflecting changes to savings products and developments in investor behavior.

It requires the member states to exchange information automatically so as to enable interest payments made in one member state to residents of other member states to be taxed in accordance with the laws of the state of tax residence.