What is a commission? The definition
In Switzerland, the terms “brokerage fee”, and “brokerage commission” are common. Brokerage is a brokerage fee that is charged for various financial services, including:
- for stock exchange transactions
- in insurance
- when buying and selling real estate
The commission is performance-based and is paid when a transaction has been successfully brokered. The customer must be informed of the amount of the commission before concluding the transaction. The calculation is in per thousand or percent and is based on securities prices, nominal values, insurance sums or real estate prices.
Brokerage for stock exchange transactions
In Swiss securities trading, there is usually a brokerage commission. Banks, online brokers or course brokers charge a brokerage fee for the brokerage, execution and settlement of stock exchange transactions. The amount of the brokerage fee depends on the provider, the type of securities, the order volume and the stock exchange. Some stock exchanges have replaced brokerage fees with uniform trading fees. Online brokers often offer traders with large volumes more favourable conditions.
What does Franko Courtage (F.C.) mean?
“Franko Courtage” (“F.C.” for short) is a clause in stock exchange trading and means that no commission is charged. This often applies to over-the-counter trading or trading with an issuer. In these cases, no course broker is interposed, meaning their commission is waived.
Brokerage as closing commission in insurance
In insurance, brokerage is understood as a closing commission. The insurance intermediary receives a commission for arranging and servicing an insurance product, which is paid either by the customer or by the insurance company. The amount and type of commission are contractually agreed between broker and insurance company and may include one-off or ongoing commissions (subsequent commissions).
What does brokerage mean when buying or selling real estate?
A real estate agent receives a commission if, for example, he sells a house or arranges the purchase of land for his clients. In Switzerland, the brokerage fee is usually paid by the seller, more rarely by the buyer, and is only due after notarization. The amount of the commission varies and is usually 1.5 to 3% of the selling price (plus VAT) for single-family and multi-family houses. For land, it is between 2 and 4%, while for rental apartments, a commission of 1 to 3 months rent (excluding additional costs) is charged. The brokerage fee can be deducted from real estate gains tax in the event of a sale.
If the commission appears to be unreasonably high, the seller may file a request for a reduction in accordance with Art. 417 OR. A court will then decide on the appropriate amount of the commission.
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