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Switzerland, France settle tax row

DAVOS, Switzerland (Reuters) - Switzerland and France settled a row over stolen bank records on Wednesday that was blocking a treaty aimed at helping Paris catch tax cheats.

Switzerland said in December it would freeze the tax treaty talks after French authorities obtained tax-sensitive client information from a former HSBC HSBA.L employee, which it said helped identify 3,000 suspected French tax evaders.

“We have found an agreement,” Swiss Finance Minister Hans-Rudolf Merz said after talks with French Budget Minister Eric Woerth on the sidelines of a World Economic Forum meeting.

“France has agreed not to use stolen data when asking for (tax) information,” he said during a visit by French President Nicolas Sarkozy, an outspoken critic of tax havens, to address the Davos conference.

A French official said Paris would continue to use the HSBC data in prosecuting tax offenders, but confirmed it would not use the records to seek information on account holders from Switzerland under the agreement.

Both sides said there were still some details to be sorted out with regards to a letter accompanying the accord reached on Wednesday, but Merz said it should be sorted out within days.

Swiss Justice Minister Eveline Widmer-Schlumpf said she had asked France to hand the data back because it was obtained illegally, but Paris defended its decision, saying it had not broken any French laws.

Under pressure from the G20, Switzerland agreed in March to relax its bank secrecy and share certain bank client data with other jurisdictions once bilateral agreements had been signed.

The issue has been politically and legally controversial in the wealthy Alpine nation, which has long prospered from its status as a diplomatically neutral private banking stronghold.

In a related issue, the Swiss government said it was sure it could resolve a legal impasse threatening a key U.S. tax deal over UBS UBS.NUBSN.VX client data and would talk to U.S. authorities to find a solution.

A Swiss court last week ruled in favor of a UBS client seeking to prevent her account data from being given to U.S. tax authorities, throwing doubt on Switzerland’s ability to deliver details of 4,450 UBS client accounts as agreed in August.

Reporting by Lisa Jucca, writing by Paul Taylor, editing by Jon Boyle