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Banks

Switzerland close to tax deal with Germany-paper

* Withholding tax on German assets agreed - negotiator

* Details still to be fleshed out

* Deal critical for Swiss wealth management industry

ZURICH, Oct 21 (Reuters) - Switzerland and Germany have agreed the outlines of a deal to impose a withholding tax on German assets hidden in secret Swiss accounts and want to work out the details this month, a top official was quoted as saying.

Michael Ambuehl, the top Swiss negotiator for international financial affairs, told Thursday’s Swiss daily Tages-Anzeiger he hoped a deal could be signed by the end of the month.

“There are no concrete figures yet but we have agreed with Germany on principles and formulas which have to be fleshed out in negotiations,” he said.

Both Germany and Switzerland rejected a report at the weekend that they had agreed a withholding tax on hidden German assets that would yield 30 billion euros ($41.78 billion) for Berlin’s stretched public coffers.

Ambuehl, who also negotiated a deal last year to end a U.S. tax investigation into top Swiss bank UBS UBSN.VX, said Switzerland had persuaded Germany of the merits of a withholding tax but gave no further details.

Some media reports have suggested a withholding tax as high as 35 percent although Swiss officials expect the tax to be set at the same level as the 25 percent Germany has for capital gains and profit from share sales.

A withholding tax means the Swiss will not automatically share account information with Germany, preserving some of the bank privacy that has been crucial to building up Switzerland’s $2 trillion offshore wealth management industry.

Ambuel said the deal aimed to solved the problem of existing untaxed assets as well as how new deposits would be taxed, more access for Swiss banks to the German market and the vexed issue of Germany’s purchase of Swiss account data from informants.

Berlin has paid for stolen data from Swiss banks to catch tax cheats and raided the German offices of Switzerland's No.2 bank Credit Suisse CSGN.VXCS.N.[ID:nLDE682150]

Switzerland’s long tradition of banking secrecy has come under heavy fire in recent years, particularly from its neighbours Germany, Italy and France, whose citizens have dodged the tax man by hiding cash in secret accounts across the border.

UBS was forced to hand over names of wealthy American clients suspected of dodging taxes last year to settle a U.S. investigation that threatened the top Swiss bank.

Swiss Finance Minister Hans-Rudolf Merz had wanted to seal a deal before he leaves office at the end of October, but his German counterpart Wolfgang Schaeuble has been unwell recently, raising questions over this time frame. (Reporting by Emma Thomasson; editing by Patrick Graham)

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