Transfer duties are cantonal taxes levied on the transfer of ownership of a property located in Switzerland. They are added to notary fees and capital gains tax on real estate to constitute the overall fiscal cost of a real estate transaction. Their rate and method of calculation vary from one canton to another. PBM Avocats advises buyers and sellers in Geneva and Lausanne on the fiscal charges related to their real estate projects and on the possibilities of legal exemption or reduction.
Nature and Legal Basis of Transfer Duties
Transfer duties are indirect taxes levied by the cantons upon registration of deeds transferring ownership of real property (sales, exchanges, contributions, partitions, licitations). Their legal basis is found in cantonal legislation: in Geneva, the Law on Registration Duties (LDE, RS GE D 3 30); in the canton of Vaud, the Law on Real Estate Transfer and Transfer Duties (LMI, RS VD 648.11). The Confederation does not levy transfer duties; this competence is exclusively cantonal.
The calculation basis is in principle the sale price stipulated in the deed, or the official value (fiscal value, official estimate) if this is higher than the agreed price. This rule aims to avoid declarations of artificially reduced prices to lower transfer duties. The notary instrumenting the deed is responsible for collecting the duties and paying them to the State in accordance with the applicable cantonal rules. Their role as delegated collector for the State confers personal liability in the event of failure to levy.
Cantonal Rates and Effective Charges in Geneva and the Canton of Vaud
In Geneva, the rate of registration duties applicable to property sales is fixed by the LDE. For an ordinary sale between unrelated parties, the overall rate is 3% (comprising the cantonal duty and the registration tax). Differentiated rates apply depending on the nature of the deed (contribution in kind, exchange, constitution of immovable pledge, lease). Surcharges may apply when certain aggravating conditions are present.
In the canton of Vaud, the transfer duty is fixed at 2.2% of the transfer value. This rate applies to alienations of properties in Vaud. To these transfer duties are added, in both cantons, notary fees (fixed by cantonal tariff) and land register fees (charges for registering the transfer in the Land Register). For a major transaction, all these charges combined may represent several per cent of the sale price. PBM Avocats draws up a full estimate of transaction costs before the sale contract is signed.
Exemptions and Reductions
Cantonal legislation provides several cases of exemption from or reduction of transfer duties. Transfers in the context of successions between legal heirs in direct line often benefit from full exemption or a reduced rate. Donations to direct descendants may also benefit from reduced rates, depending on the canton. Certain corporate restructurings (mergers, divisions, transfers of assets within the meaning of the Merger Act, MA) may give rise to exemptions if the legal conditions are met.
There are also specific exemptions for transfers between spouses or between registered partners, for certain public benefit organisations, and for acquisitions of owner-occupied housing within the framework of certain cantonal policies to promote home ownership. The precise conditions of each exemption must be verified against the applicable cantonal legislation and, where applicable, local administrative practice.
Notary Fees and Land Register Costs
Notary fees are regulated by the cantons. In Geneva, the Regulation on Notary Emoluments fixes the applicable tariffs based on the value of the transaction and the nature of the deeds. In the canton of Vaud, the notarial law and its implementing regulation govern the tariffs. For a standard sale, the notary's fees include preparation of the contract, preliminary searches, registration formalities and preparation of the charges statements. The total amount of notary fees is generally between 0.1% and 0.5% of the sale price depending on the complexity of the operation.
Land register fees (charges for registering the transfer of ownership, new or modified mortgages in the Land Register) are added to notary fees and transfer duties. They are calculated according to the cantonal tariffs specific to the Land Register. PBM Avocats coordinates all the legal and fiscal aspects of the real estate transaction, in collaboration with the instrumenting notary when their designation falls within the choice of the parties.
Frequently Asked Questions on Transfer Duties and Registration Fees
What transfer duties apply in Geneva and Vaud?
In Geneva, transfer duties are governed by the Law on Registration Duties (LDE). The ordinary rate is 3% on the sale price for properties (including 1% for the cantonal tax and 2% for the registration tax). Surcharges apply in certain cases. In the canton of Vaud, transfer duties are fixed by the Law on Real Estate Transfer and Transfer Duties. The rate is 2.2% on the transfer value (price or official estimate, whichever is higher). These rates are exclusive of notary fees, which are added separately.
Who pays the transfer duties in a real estate sale?
In principle, transfer duties are borne by the purchaser of the property. However, the parties are free to contractually agree a different allocation, for example putting them to the account of the seller or sharing them. In Genevese practice, transfer duties are most often borne by the purchaser, who pays them to the notary at the time of the deed of sale. The notary is responsible for the declaration and payment to the State. In the event of non-payment, a legal pledge right of the State over the property guarantees recovery.
Do real estate donations and successions give rise to transfer duties?
The answer varies by canton. In Geneva, real estate transfers by succession or donation to heirs in direct line (parents, children, spouses) benefit from an exemption from transfer duties (LDE), but may be subject to succession/donation duties under the Genevese law on succession duties. In the canton of Vaud, similar exemptions or reductions exist for transfers in favour of direct descendants. The specific rules of each canton concerned must be verified before any asset transaction.
What are the notary fees in Switzerland for a real estate transaction?
Notary fees vary by canton, as each canton defines its own notarial tariff (or leaves it free, in certain cantons). In Geneva, the notary tariff is fixed by cantonal regulation and calculated generally as a percentage of the transaction value (approximately 0.1% to 0.3% depending on the deeds and value). In the canton of Vaud, the tariff is similar and governed by the notarial law. For a standard sale, the total notary and transfer duty costs combined generally represent between 3% and 5% of the sale price, depending on the canton and the circumstances of the transaction.
Do transfer duties apply to sales of company shares holding a property?
This question is central to structured real estate transactions. The sale of shares in a company whose principal asset is a Swiss property constitutes, in certain cantons, an indirect alienation of property subject to transfer duties (and to capital gains tax on real estate). The concept of alienation of property in the economic sense is provided for by the HATA (art. 12 para. 2 let. a) and transposed differently depending on the canton. Both Geneva and Vaud have assimilation rules that subject certain transfers of shares in real estate companies to transfer duties. PBM Avocats analyses the fiscal implications of each structure before its implementation.