Signed in Edinburgh by Scottish First Minister Alex Salmond and UK Prime Minister David Cameron, the deal will allow Scotland to decide in a 2014 referendum whether it should become an independent country or stay within the United Kingdom.
Nationalists have timed the vote to coincide with the 700th anniversary of the Battle of Bannockburn (24 June 1314), when Scottish forces led by King Robert the Bruce defeated English invaders. European elections are due to be held between 5 and 8 June 2014, unless the Council unanimously decides to change the dates.
Cameron opposes Scotland's push, arguing that Britain is stronger together. But London agrees it is up to Scotland to decide its future for itself in a vote.
Now that the starting gun has been fired, one of the most important questions is whether an independent Scotland would have to renegotiate EU membership.
Asked to comment, European Commission spokesperson Pia Ahrenkilde Hansen said there was no point of speculating on the EU side until the UK government asks the question.
She said: “It’s indeed not the role of the Commission to express a position on questions of internal organisation relating to the constitutional arrangements in the member states.
“What I can add, however, is that, concerning certain scenarios such as the separation of one part of a member state or the creation of a new state, these would not be neutral as regarding the EU treaties. The commission would express an opinion on the legal consequences under EU law on request from a member state detailing the precise scenario.”
Ahrenkilde Hansen also confirmed that no requests had been received from two other EU regions looking to become independent - Catalonia in Spain and Flanders in Belgium.
“We don’t have a scenario described by a member state on the table at the moment,” she said.
Commission President José Manuel Barroso recently said that any country winning independence from a current EU member state would have to renegotiate its membership.
Intrigue over wording
No official details of the agreement between Salmond and Cameron were immediately released, although the broad outlines have been widely trailed.
Salmond is expected to have accepted London's demand that there should be only one straightforward "in or out" question on whether voters want to be part of the United Kingdom.
He had earlier campaigned for a second question on whether Scotland should be given more powers in the so-called "devo max" form of enhanced devolution that stops short of independence.
London is thought to have agreed to allow Salmond to lower the voting age to 16 from Britain's countrywide 18 - a coup for Salmond, who believes that young people are more likely to vote in favour of independence.
London argues that an independent Scotland - home to about five million people - would struggle to make ends meet as the bulk of is current funding comes from a 30-billion-pound (€37 billion) grant from the UK government.
But one of the most contentious issues at stake is the ownership of an estimated 20 billion barrels of recoverable oil and gas reserves beneath the UK part of the North Sea.
Britain is also worried about the future of its nuclear submarine fleet based in Scotland as Salmond says there would be no place for nuclear arms on Scotland's soil after independence. Moving the fleet elsewhere would be costly and time-consuming.
Many Scots are unconvinced about independence. Opinion polls show only between 30% and 40% of them are in favour - a range that has changed little as negotiations have intensified.