Switzerland Plans to Increase VAT Rates From 2028

Switzerland's Parliament has approved an increase in VAT rates to help finance the country's new 13th old-age pension (AHV) payment. The measure amends the Federal Constitution and, as such, still requires approval by Swiss voters in a mandatory referendum before it can take effect.

How Will VAT Rates Change in Switzerland?

The VAT rate changes approved by Parliament are:

• Standard VAT rate increases by 0.4 percentage points, from 8.1% to 8.5%.
• Special rate for accommodation services (hotels) increases by 0.2 percentage points, from 3.8% to 4.0%.

Reduced rate for essential goods, such as food and medicines, remains unchanged at 2.6%, the level applicable from 2024. All revenue raised by the increase will be allocated in full to the AHV compensation fund, which finances Switzerland's old-age pension system.
Find the VAT rates in Switzerland in our VAT manual.

Background: Financing the 13th AHV Pension

The 13th AHV pension is an additional annual pension instalment that Swiss voters approved in a popular vote. Financing this extra payment required additional resources for the AHV system, and the two chambers of Parliament debated at length whether the cost should be covered through a VAT increase alone or combined with higher payroll contributions. The compromise ultimately adopted funds the measure exclusively through VAT.

Is the VAT Increase Final?

Not yet. The increase must still be approved by the Swiss people and the cantons in a nationwide referendum, as required for any constitutional amendment. Only if voters approve the measure will the new rates enter into force, at a date to be determined by the Federal Council. If voters reject the measure, the VAT increase will not proceed and an alternative financing solution will need to be found. Contact Marosa if you would like to discuss how this potential change could affect your Swiss VAT compliance.

What Should Businesses Do Now

While the increase is not yet in force, businesses that are or will become liable for Swiss VAT — including foreign businesses registered for VAT in Switzerland — may want to start reviewing the potential impact on:

• ERP and billing system VAT rate configurations
• Pricing and contracts referencing current VAT rates
• Long-term contracts spanning the potential rate-change date

Find here our overview of VAT rates in Europe