Zurich Real Estate Gain Tax: High Sale Prices Alone Do Not Justify Reducing the Broker's Commission to 1.5%

In its decision 9C_706/2025 dated July 17, 2026, the Federal Supreme Court clarified the Zurich practice on a point of importance for real estate transactions: A high sales price alone is not sufficient to reduce the real estate brokerage commission deductible for real estate gains tax purposes from a flat rate of 2% to 1.5%. In doing so, the Federal Supreme Court sets limits on a rigid reduction practice and reinforces the importance of the specific circumstances of each individual real estate sale.

In the case under review, a real estate company sold three apartment buildings in the city of Zurich for a total price of CHF 22.5 million. A significantly higher commission had in fact been agreed upon and paid for brokering the sale. However, the City of Zurich recognized only 1.5% of the sale proceeds as deductible investment costs. It justified this, in particular, by arguing that lower percentage commissions are customary in the market for high sales prices. The Zurich Administrative Court, on the other hand, allowed 2%. Given a sales price of CHF 22.5 million, the 0.5% difference resulted in additional deductible investment costs of CHF 112,500 and thus in a correspondingly lower real estate gains tax.

The legal basis is § 221(1)(c) of the Zurich Real Estate Gains Tax Act (StG ZH), according to which “customary real estate broker commissions” are considered deductible expenses for real estate gains tax purposes. According to long-standing Zurich case law, 2% of the purchase price generally serves as a benchmark for a customary commission. However, this figure does not represent a rigid upper or lower limit. Under special circumstances, both higher and lower commissions may be justified. Any deviation from the benchmark must, however, be objectively justified and based on the specific circumstances of the transaction.

That was precisely what was missing in this case. The assumption put forward by the City of Zurich—that, for sales proceeds exceeding CHF 10 million, only 1.5% should generally be recognized as customary—could not be substantiated with sufficiently representative market data. It was also particularly relevant that the CHF 10 million threshold was applied to the total sale of multiple properties, even though no single property reached that value. The Federal Supreme Court therefore ultimately upheld the lower court’s ruling. A high transaction value alone does not, therefore, justify a blanket reduction in the tax-recognized commission rate.

However, this ruling does not mean that 2% will automatically be deductible in the future for real estate sales in Zurich. In this specific case, the commission actually agreed upon was approximately 6.4%, yet only 2% was recognized for tax purposes. Taxpayers must continue to be able to prove that brokerage services were actually rendered and that the claimed commission corresponds to the specific circumstances. At the same time, the tax authorities generally retain the option to classify a percentage lower than the market rate for transactions involving very high values—but this requires a transparent and reliable basis.

The scope of the ruling must also be put into perspective: The Federal Supreme Court has not established a 2% rate applicable throughout Switzerland. Art. 12(1) of the Federal Tax Act (StHG) leaves the cantons a certain degree of discretion in determining what expenses are deductible. For real estate transactions in Zurich, however, the practical message is clear: a reduction in the broker’s commission below 2% should not be accepted solely on the basis of the sales price. Particularly in the case of larger transactions, it is therefore worthwhile to thoroughly document the specific services provided by the broker, the pricing process, and whether the agreed-upon commission is in line with market conditions.

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