Federal Council announces 29 Nov 2026 referendum on 0.4% VAT hike from 2028
5 October 2026: Switzerland will vote on 29 November 2026 on increasing the standard VAT rate from 8.1% to 8.5% to help finance the new 13th annual state pension payment.
The Federal Council confirmed this following a Parliamentary confirmation in June. Separately, a 0.5% VAT rise for defence spending is under consideration.
2028 standard VAT rate rise; no change to reduced rate; hotel rate rise to 4%
If approved, the new rates could apply from the beginning of 2028:
- Standard VAT rate: 8.1% to 8.5%
- Hotel accommodation: 3.8% to 4.0%
- Reduced VAT rate: remains unchanged at 2.6%
The VAT increase is expected to raise around CHF1.5 billion annually towards the cost of the 13th pension payment, which will be paid for the first time in December 2026.
Disagreement remains over pension contributions
While both parliamentary chambers are maw aligned on the 0.4% VAT increase, disagreement remains over how the pension reforms should be financed.
The Council of States supports a permanent VAT increase of 0.4% together with a 0.2% increase in employee and employer pension contributions. The National Council continues to oppose the payroll contribution increase.
The National Council had also proposed limiting the VAT increase until 2033, whereas the Council of States favours a permanent increase.
Switzerland last increased its VAT rate on 1 January 2024, from 7.7% to 8.1%, to help fund earlier pension reforms. Even after a further increase to 8.5%, Switzerland would continue to have one of the lowest standard VAT rates in Europe, compared to an EU average of more than 21%.
Following the March 2024 referendum approving a 13th monthly state pension payment, the Swiss government proposed a VAT increase to help finance the measure.
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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Package of reforms triggers national referendum
Since the VAT rate change was linked to other measures to change the benefits package, and therefore a change to the Federal Constitution, a national referendum was required – hence today’s vote.
The extra revenue would be applied to cover shortages on the Swiss Old Age Insurance contribution which falls short of the ongoing payments. This is being exacerbated by the wave of Baby Boomer generation (born between 1946 and 1964) now retiring.
As part of the reforms, women will work longer – to 65 years instead of 64.
Read our Swiss VAT guide for more background on Switzerland’s Value Added Tax regime.
Second attempt to raise Swiss VAT to fund pensions
Back in 2017, the Swiss voted against a VAT rise to fund a pension reform package. The rate then was 8%, and the vote proposed 8.3%. So instead a planned cut to the current 7.7% went ahead on 1 January 2018.
