What are transfer taxes?

Transfer taxes are levies that are due upon the sale or other disposal of real estate. Together with real estate gains taxes, they fall into the category of “legal transaction taxes.”

Transfer taxes are always levied when real estate becomes the property of another person – regardless of whether or not any money has been transferred. In this respect, transfer taxes differ from real estate gains taxes: they are only due if a profit is made on the sale.

Transfer taxes are regulated at the cantonal level and thus vary depending on the location where the transaction is conducted. In some cantons, transfer taxes are known by a different name, while in others, this type of tax is not levied at all.

The transfer of real estate is taxed here – that is, the transaction that occurs when it is sold or otherwise transferred and transferred to a new owner. Real estate includes not only the land itself, but also other associated objects. In the Swiss Civil Code (CC), the term “real estate” is further defined in Article 655, Paragraph 2 of the CC. Accordingly, it includes the following:

• Real estate (land, buildings, plants)
• Independent and permanent rights recorded in the land register (including building rights, residential rights)
• Co-ownership shares in real estate (e.g., condominiums)
• Mines

Transfer taxes are due on the sale of real estate. But what exactly is meant by a transfer?

The most common type of transfer is the transfer under private law. This includes the legally binding purchase or exchange of real estate, but also inheritance or a gift. On the other hand, a public decree can also lead to a transfer tax. This is the case, for example, in cases of expropriation, compulsory sale, or consolidation of property.

An exception is a transfer of ownership. In this case, it is not the actual ownership of a property that is transferred, but only the right of disposal. There is also no change in the land register. Transfer taxes are still due. This is often the case, for example, when shares in a real estate company are sold.

In the context of real estate capital gains tax, disposals are defined in Article 12 of the Tax Harmonization Act (StHG). The same applies to transfers of ownership, namely the following:

• Legal transactions that economically have the same effect as a sale
• Transfer of a property from private assets to business assets
• Encumbrance of a property with private-law easements or public-law property restrictions
• Transfer of participation rights from private assets to real estate companies (however, cantonal law prevails here)
• Planning gains achieved without a sale within the meaning of the Spatial Planning Act (cantonal law also prevails here)

In contrast to real estate gains tax, the transfer tax is also due if no money is involved in the transfer. It is therefore levied not only on purchase transactions, but also on inheritances, other types of gifts, or exchanges.

The cantons themselves regulate transfer taxes in their own tax laws – in some cases, this responsibility is delegated to the municipalities. Therefore, transfer taxes are not levied by the federal government and are not mandatory nationwide. In some cantons (Uri, Glarus, Schaffhausen), there are no transfer taxes, but only a land registry fee. A transfer fee is also possible – this only covers the administrative fees and is not dependent on the value or purchase price of the property.

• Schwyz is the only canton that does not charge transfer taxes, transfer fees, or land registry fees.
• In Zurich, Uri, Glarus, Zug, and Schaffhausen, there are no transfer taxes, only land registry fees.
• In the remaining cantons, transfer taxes are levied.
• Among others, St. Gallen, Basel-Stadt, Appenzell Ausserrhoden, Geneva, and Jura offer reduced tax rates for certain transfer transactions.

There are also a number of special regulations and exceptions. In Bern, for example, sales with a purchase price of up to CHF 800,000 can be exempt from transfer tax under certain conditions (this is only possible if the property will serve as the new owner’s primary residence).

The rules regarding who must pay transfer taxes and how much they are vary from canton to canton. In most cantons, however, the person who acquired the property must pay. In some cantons, however, the tax burden is split between the two contracting parties. In still other cantons, agreements can be made in the purchase agreement.

The amount of transfer taxes and how they are calculated naturally depend on the specific situation. If the sale is a normal purchase, the taxes are based on the purchase price. If the situation is different (e.g., a gift), the market value or the official value of the property can be used as the assessment basis.

To give you an idea of ​​the tax range, we have selected the per mille rates for some cantons:

• 10‰ in St. Gallen, Thurgau, and Nidwalden
• 15‰ in Obwalden and Lucerne
• 22‰ in Solothurn
• 30‰ in Basel-Stadt and Geneva
• 33‰ in Neuchâtel

If no transfer tax is levied, but only a basic fee, this is usually considerably cheaper:

• 2‰ for the registration of a mortgage or transfer of ownership in Uri
• 4‰ of the purchase or acquisition price in Aargau
• 11‰ for transfers of ownership for consideration in Ticino

Exceptions and special cases vary by canton. For example, a reduced rate is applied in some locations: If a property in Solothurn is sold to descendants or spouses, only half the normal rate, namely 11‰, is payable. In addition, the canton of Solothurn offers a reduced tax rate for exchange transactions or primary residences; other cantons grant discounts if the property is purchased for personal use.

Depending on the canton, transfer taxes can become a complex issue. A lawyer or expert familiar with cantonal tax laws can be helpful. They can assist with the preparation of the relevant legal transactions and determine whether transfer taxes are due, how much they are expected to be, and who is responsible for paying them.