May 9, 2012 / 12:40 PM / 8 years ago

UPDATE 1-Italy seeks tax on secret funds in Swiss accounts

* Deal expected to be similar to German and British accords

* Recession-hit Italy could net much-needed revenue

* Estimated 100-200 billion euros of undeclared Italian cash

By Lisa Jucca and Catherine Bosley

MILAN/ZURICH, May 9 (Reuters) - Italy agreed with Switzerland on Wednesday to discuss ways to retroactively tax undeclared funds stashed by Italians in secret Swiss accounts, which could net Rome billions of euros of badly needed revenue while it fights a deep recession.

Italian Prime Minister Mario Monti had initially been reluctant to discuss a tax deal similar to those signed by Britain and Germany with Switzerland.

Under those accords, Switzerland will act as a tax collector for a one-off levy on undeclared money but Swiss banking confidentiality will be preserved as no names of account holders will be divulged.

However Monti overcame initial doubts once it became clear the European Commission would not object to the deal, a source close to the talks told Reuters.

“The model will be the agreements signed with Britain and Germany,” said Mario Tuor, the Swiss spokesman for financial issues. “But it’s too early to talk about details.”

Monti, a technocrat, was appointed prime minister in November at the peak of the euro zone crisis to pull Italy back from financial disaster.

There is no official data on how much undeclared Italian money sits in Swiss accounts, but some estimates put it at between 100 and 200 billion euros ($130 billion to $260 billion).

Switzerland is for its part seeking greater access to financial markets as well as to be removed from an Italian black list that rates it as unwilling to cooperate on tax issues.

A first meeting of Swiss and Italian diplomats took place on Wednesday and a fresh meeting is scheduled for May 24. Diplomats said it was too early to say how long the talks would last.

Monti is expected to meet Swiss President Eveline Widmer-Schlumpf at a date yet to be set.

Strict secrecy has helped Switzerland become the world’s biggest wealth manager thanks to an estimated $2 trillion of non-resident money administered by its banks.

But a string of international tax fraud cases against its largest banks and relentless pressure from cash-strapped European nations and the United States has made Berne more willing to cooperate with foreign tax authorities.

Monti has launched a crackdown against tax evasion but is under pressure to do more to target big money after suicides by indebted businessmen and protests against austerity measures highlighted the human cost of the financial crisis.

Germany, Switzerland’s biggest trading partner, has agreed to a Swiss tax on German undeclared capital hidden in Swiss vaults of between 21 and 41 percent, to be collected in 2013.

The accord also included the introduction of a withholding tax on capital gains of around 26 percent on future deposits of undeclared funds from Germans. A similar deal has been signed by Switzerland with Britain.

Under the previous Italian government, led by Silvio Berlusconi, Rome had chosen to attempt to attract offshore capital back into Italy through generous amnesties under which undeclared capital was taxed at a maximum of 7 percent.

The European Union has long tried to encourage automatic exchange of tax information across countries. ($1 = 0.7695 euros) (Reporting By Catherine Bosley and Lisa Jucca; Editing by Pravin Char)

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