26 European countries without borders between them
The Schengen area, also known as the "Schengen zone," is a large swath of Western, Atlantic, and Eastern Europe where internal borders have been eliminated. Once you enter any of the countries that have signed the Schengen Agreement of 1985, you can cross into other countries of the Schengen zone without showing your passport. (However, police can still ask to see your papers when you're in a country, and local laws governing residency and work permits still apply.)
As a practical matter, the Schengen Agreement means that you can save time when going from country to country within the Schengen zone, and--if you're from a country whose citizens require visas in Europe--a single "Schengen Visa" will let you travel freely within the zone's 25 countries up to 90 days. (For more on visa requirements, see page 2.)
Countries in the Schenzen Area:
Most countries in the Schengen zone belong to the European Union, but some (such as Switzerland) are from outside the EU. What's more, some countries that are in the EU (such as Britain) aren't part of the Schengen area. This means that, for example, you'll need to go through passport control if you're going from Glasgow to Amsterdam by air or from Paris to London on Eurostar.
As of January, 2014, the 25 fully-implemented members of the Schengen zone included Austria, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Norway (excluding Svalbard), Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland. For details, see the links on page 2 of this article.
What to expect on arrival:
If you're arriving in the Schengen zone from a non-Schengen country (such as Britain, Ireland, or the United States), you'll need to go through passport control. (International airports in Europe typically have separate "Schengen" and "non-Schengen" concourses or terminal wings.) Similarly, if you're going from the Schengen zone to a non-Schengen country, you'll need to show your passport.
Customs regulations may also apply: Between EU countries, there's no need to make a customs declaration, but not all Schengen countries belong to the EU. If you're in an airport or ferry terminal, just follow the exit signs, which will take you through customs if necessary. Use the red customs line if you have foreign purchases to declare, or the green line if you don't.
Schengen Web links:
Wikipedia: Schengen Area
The Schengen Visa is a tourist and business visa. It allows travel in Schengen countries for up to 90 days within a 180-day (six-month) period, but it does not allow you to become a resident or get a job.
Do you need a visa to enter the Schengen area (or the EU, for that matter) as a tourist? That depends on your nationality. The German government has a Table of Countries Whose Citizens Require / Don't Require Visas to Enter Germany that will help you determine whether you need a visa to visit the Schengen area and the European Union.
Another useful resource is Schengen Visa Info, which covers the basics with an emphasis on student and transit visas.
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