UPDATE 1-Austria clinches quick Swiss tax deal to bolster budget
* Vienna, Berne agree deal to tax secret Swiss accounts
* Follows similar deals struck with Britain, Germany
* Existing funds to be taxed at between 15-38 pct (Adds quotes, details)
By Caroline Copley and Albert Schmieder
VIENNA/BERNE April 13 (Reuters) - Austria nailed down a deal with Switzerland on Friday to tax money stashed by its citizens in secret Swiss accounts, securing a 1 billion euro ($1.3 billion) windfall needed to help shore up its finances.
But Austria's deal is far less favourable than those struck by Britain and Germany, which both responded to political pressure by extracting big up-front payments and more concessions from Switzerland.
The deals are an attempt to claw back taxes from citizens using Swiss offshore accounts to hide savings from tax authorities.
Austria was anxious to agree a quick deal with its neighbour as it has already included the 1 billion euro tax windfall in a package aimed at balancing the state budget by 2016. At a news conference in Berne, Austrian finance minister Maria Fekter said she expected the funds to start flowing in the first half of 2013.
"The Swiss agreement proves our reform package is based on solid fundamentals", Fekter told a media briefing. "Through this additional income we will achieve our budget goals and further strengthen Austria."
Despite the hurried negotiations and less lucrative terms struck by Austria, the accord will be chalked up as a win for Fekter, who has faced criticism that her ministry's package of tax hikes and spending curbs was based on sound numbers.
The agreement is a blueprint for the type of deal Switzerland hoped to shop around Europe when it began discussing withholding tax agreements, which Swiss officials see as a way to preserve secrecy while appeasing foreign pressure to close tax loopholes.
The German and British arrangements have given rise to doubts among bankers in Switzerland, some of whom privately questioned whether the stiffer terms still made the withholding tax strategy worthwhile.
"The agreement represents a good result, as it satisfied the interests and requirements of both countries equally well," the Swiss government said on Friday.
In its eagerness to bring the deal into force by the start of 2013, Austria has forgone a chunk of cash up front. In contrast, Germany will receive 2 billion Swiss francs ($2.2 billion) up front, and Britain 500 million francs.
Under the terms of the Austrian deal, existing funds will be taxed at a rate of 15 to 38 percent, based on the size of the deposit stashed away.
This is less than 21 to 41 percent rate agreed in a revised deal with Germany last week, after opposition German lawmakers blocked the original accord, saying it was too lenient.
Vienna estimates there are some 12 billion to 20 billion in undeclared funds parked in Swiss accounts.
Future investment income will be taxed at a rate of 25 percent, equivalent to Austria's capital gains tax. Inheritance tax, which forms part of the British and German deals, won't be levied. The finance ministry hopes to net some 50 million euros in revenue annually from 2014.
A global crackdown by cash-strapped governments on tax dodgers has chipped away at Switzerland's cherished bank secrecy, that helped it build up a $2 trillion offshore financial sector.
Withholding tax deals allow Switzerland to preserve client confidentiality and head off the automatic exchange of information, which the European Union has been trying to deepen in the bloc.
The deals form the backbone of Switzerland's 'clean money' strategy, unveiled in February as it seeks to shake off its image as a haven for untaxed funds.
The Swiss Bankers' Association said the three deals underscored Switzerland's commitment to this strategy. The legislation will be put to the Swiss parliament in June.
It has held technical talks with Italian officials, while French Finance Minister Francois Baroin has indicated talks might continue after the presidential election, Swiss Finance Minister Eveline Widmer-Schlumpf said in an interview published on Friday. ($1 = 0.7590 euros) ($1 = 0.9192 Swiss francs) (Reporting by Caroline Copley and Albert Schmieder; additional reporting by Katharina Bart. Editing by Jeremy Gaunt.)
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