Federal Assembly votes against Council of States plan to raise reduced rate from 3.8%
Switzerland’s parliament has blocked a proposal to increase the 3.8% reduced VAT rate on hotels. Accomodation enjoys a special reduced rate in Switzerland which is due to expire from 1 January 2027. Since 1996, the hotel industry has paid only 3.8% instead of the standard rate.
Separately, there is a 2026 Swiss standard rate VAT rise to 8.8%. The current standard rate is 8.1%.
The special rate applies to: Accommodation services (overnight stays with breakfast) in the hotel and accommodation business (e.g. letting of holiday apartments)
See our Swiss VAT guide for more.
Oct 2024: Federal Council backs 0.7% VAT increase in 2026 to fund pensions rise
The Swiss Cabinet on 16 October 2024 approved a draft decree for a VAT hike from 0.4% to 0.7%, taking the standard rate from the current 8.1% to 8.8% – probably in 2026. This could bring in CHF 4.2 billion to fund pensioners a 13th monthly payment each year.
Switzerland raised its VAT rate on 1 January 2024 from 7.7% to 8.1% to fund pension liabilities gap. It has the lowest VAT in Europe of any major country. The EU average VAT rate is over 21%.
Following a national referendum vote to increase state pensions, the Federal Department of Home Affairs had announced on 14th August that its initial proposal of a 0.4% VAT rise to 8.5% was the most likely. But on 13 September, the government confirmed it will seek 0.7%. It will bring forward legislation in October.
1st Jan 2024 VAT rise to fund pension reforms for ageing population
An ageing population, and funding shortage in the public pension system (OASI), has led to the Swiss to vote in September 2022 for a rise in VAT rates from January 2024 as follows:
- Standard rate from 7.7% to 8.1%;
- Reduced rate from 2.5% to 2.6%
- Hotel accommodation rate from 3.7% to 3.8%
The vote for the increase in Value Added Tax received 55.1% of the vote. The rise will only remain in place until 2030.
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