Germany expects Swiss tax deal by end October

* Swiss to apply withholding tax to German assets

* Swiss won't move to automatic exchange of information

* Solution sought for long-standing untaxed German money

By Catherine Bosley and Albert Schmieder

BASEL, Switzerland, Sept 3 (Reuters) - Germany expects to clinch by end-October a landmark tax deal with Berne aimed at resolving the problem of an estimated 200 billion euros ($268 billion) of untaxed German wealth hidden in Switzerland.

Germany, along with Italy, the United States and France, has been one of the most fervent critics of Switzerland's banking secrecy laws. 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.VX) (CS.N). [ID:nLDE66F1HT]

Under the planned deal, crucial to Switzerland's $2 trillion offshore wealth management industry, Germany would accept the Swiss applying a withholding tax on German assets in return for more cooperation from Berne in tax evasion cases, German Finance Minister Wolfgang Schaeuble said on Friday.

But the Swiss will not automatically share bank information with Germany, preserving some bank privacy.

"We want to have this done by the end of October. It will be a combination of withholding tax and administrative assistance," Schaeuble said at an economics conference in Basel. "We will also find a solution for the past," he added, speaking of the so-called "Schwarzgeld" - untaxed money some Germans have been hiding in secret Swiss accounts for decades.

Schaeuble would give no further details of the planned deal, but Swiss officials expected the withholding tax to be set at the same level as the 25 percent Germany has for capital gains and profit from share sales.

"Having Germany accept the principle of the withholding tax is already a lot. They had always been sceptical," said a Swiss official on condition of anonymity.

The official added that the two countries had not yet agreed on any firm detail on how to deal with the past.

BLUEPRINT DEAL

Tax experts say the agreement with Germany, Switzerland's largest trading partner, would pave the way for similar deals with other large European partners.

Under pressure from an international crackdown on tax evasion, Switzerland has committed to accepting no more untaxed money in future. [ID:nLDE65S16L]

But finding a way of dealing with taxes not paid in the past has proven more difficult.

While cash-strapped Germany wants to go back as far as possible to maximise revenue from untaxed wealth, Berne would like to limit this to a few years.

Schaeuble said the agreement should have the same preventative power as the automatic exchange of tax-sensitive information used among European Union member states.

Switzerland is firmly opposed to moving to a regime of full transparency of banking information, but made concessions over its bank secrecy last year under pressure from G20 nations and amid a bitter U.S. tax fraud investigation into Switzerland's biggest bank UBS (UBSN.VX)(UBS.N). (Additional reporting from Lisa Jucca in Zurich; Editing by David Cowell)