ZURICH, March 26 (Reuters) - Liechtenstein will start tax talks with Britain next week with a view to cooperating more in fighting tax cheats and finding ways to encourage voluntary disclosure of its bank clients' untaxed money.
Finding a non-punitive way to bring undeclared cash onshore is a challenge for European offshore centres such as Liechtenstein and Switzerland after they agreed earlier in March to relax their strict bank secrecy rule in tax evasion matters.
To improve cooperation on tax evasion, Liechtenstein needs to negotiate bilateral agreements with other countries. Britain is the first country to have given the green light to formal tax talks, but Liechtenstein has also started informal discussions with Germany and others.
"We anticipate that such an approach could pave the way not only for the existing clients of our own financial centre but also for clients of other financial centres," Liechtenstein's newly-elected prime minister Klaus Tschuetscher said in a statement on Thursday.
Alpine tax haven Liechtenstein said earlier this month it was willing to embrace standards for tax cooperation set up by the Organisation for Co-operation and Economic Development (OECD) to avert a frontal attack by G20 countries that will discuss a crackdown on tax evasion at an April 2 meeting.
Liechtenstein had been under pressure since Germany obtained last year confidential data of bank LGT, the country's largest bank, with names of German citizens hiding money in the tiny principality.
"We recognise that Liechtenstein's specific approach could very well provide transparency in tax matters for the United Kingdom and other countries," Dave Hartnett, Permanent Secretary for Tax at the British tax administration, said in the statement.
Switzerland and other bank secrecy strongholds have also said this month they want to sign up to the OECD tax standards to avoid being blacklisted by the G20.
Switzerland, which alone manages an estimated $2.2 trillion or roughly one third of the world's offshore wealth, said at the time of the announcement it too would like to find a solution for the undeclared assets that its banks still hold.
(Writing by Lisa Jucca; Editing by Victoria Main)