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 Zurich’s 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—which is 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 formulaic 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 the brokerage services. However, the City of Zurich recognized only 1.5% of the sale proceeds as deductible investment costs. It justified this decision in particular by noting that lower percentage commissions are customary in the market for high sale prices. In contrast, the Zurich Administrative Court allowed 2%. Given a sales price of CHF 22.5 million, the difference of 0.5 percentage points resulted in additional deductible investment costs of CHF 112,500 and, consequently, 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 “standard 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 is generally considered a benchmark for a customary commission. However, this figure does not constitute 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 is precisely what was missing in this case. The City of Zurich’s assumption—that, for sales proceeds exceeding CHF 10 million, only 1.5% should generally be recognized as the going rate—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 price of multiple properties, even though no single property reached that value. The Federal Supreme Court therefore 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, the 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 with very high values—but this requires a transparent and robust basis.

The scope of the ruling must also be put into perspective: The Federal Supreme Court did not establish 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 which expenses are deductible. For real estate transactions in Zurich, however, the practical message is clear: a reduction in the broker’s commission to below 2% should not be accepted solely on the basis of the sales price. Particularly in the case of larger transactions, it is therefore advisable to thoroughly document the specific services provided by the broker, the pricing process, and whether the agreed-upon commission is in line with market standards.

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