AA and BB acquired a property located in the canton of St. Gallen in 1990. In 2022, they sold the property to their son for CHF 750,000. The purchase price was fully financed by the buyer’s bank on the basis of a market value of CHF 1,000,000 as determined by the bank. In their real estate capital gains tax return, they requested a full deferral of the tax. The qualification of the transaction as a “donation,” and consequently the granting of a full tax deferral, was not confirmed by the cantonal tax authority.
Article 12(3)(a) of the Swiss Tax Harmonization Act (LHID) provides, inter alia, for a deferral of real estate capital gains tax in the event of a transfer of ownership by way of donation. It is therefore necessary that the transaction be carried out gratuitously in order to obtain the deferral. In the past, the case law of the Swiss Federal Supreme Court has also confirmed the application of this provision in cases of a “mixed donation” (see ATF 9C_335/2023).
In the case of a mixed donation, the cantons apply two different models: either a full deferral of the tax (the “all-or-nothing” principle) or a partial deferral of the tax. The canton of St. Gallen has opted for the second model, under which the (partial) gain is taxed insofar as it exceeds the investment costs.
In judgment 9C_271/2025, the Swiss Federal Supreme Court undertakes a literal, systematic, historical, and teleological interpretation of Article 12(3)(a) LHID. In particular, it finds that a mixed donation also constitutes a donation (sui generis), which does not justify such a fragmentation, and that, in the context of a pure or mixed donation, the donor realizes no profit or only a reduced profit and receives no funds or only reduced funds.
In particular, the tax deferral is advantageous solely for the transferor, and the latent tax burden borne by the transferee is justified only in the case of gratuitous transfers. The immediate taxation of the portion transferred “for consideration” would lead to a sharing of the (latent) tax burden, which does not necessarily follow from the meaning or purpose of the provision. The deferral of taxation makes it possible, inter alia, to take into account the personal circumstances of the parties, especially where the transaction is carried out for estate-planning purposes.
It is therefore concluded that the regime adopted (inter alia) by the canton of St. Gallen—namely, a partial deferral in the case of a mixed donation—is contrary to federal law. This conclusion aligns with the prevailing view in legal scholarship, according to which only a full deferral complies with the LHID (pursuant to the “all-or-nothing” principle).
