The European Union has taken a major step toward setting up a European Public Prosecutors Office (EPPO) which would be able to investigate financial fraud affecting the bloc.

Twenty of the 28 EU nations at a meeting of justice and interior ministers agreed on the creation of the Luxembourg-based office under an enhanced cooperation agreement. The chief prosecutor will be able to investigate fraud involving EU aid and subsidies and VAT infractions.

The EU has said such fraud amounts to some 500 million euros a year.

"This is a perfect example of where European collaboration is both necessary and reaps major rewards for the public," said Greens MEP Jan Philipp Albrecht.

The plan must still get the backing from the European Parliament.

Sweden earlier this year opposed the EPPO along with other member states, including Poland, Hungary, Malta, the Netherlands, the UK, Denmark and Ireland voicing their objections.

The initial plan is to have the EPPO up and running sometime in early 2019.