Parliament has approved plans to increase Switzerland's standard and accommodation VAT rates from 2028, with the additional revenue earmarked for the AHV compensation fund.
Switzerland’s parliament has approved a constitutional amendment that will allow an increase in Value Added Tax (VAT) rates from 2028 to help finance the country’s newly introduced 13th monthly pension payment under the Old-Age and Survivors’ Insurance (AHV) system.
Under the measure adopted on 19 June 2026, the Federal Council would be authorised to raise the standard VAT rate by 0.4%, increasing it from 8.1% to 8.5%.
The special VAT rate applicable to accommodation services would rise by 0.2%, from 3.8% to 4.0%.
The reduced VAT rate of 2.6% on essential goods, including food and medicines, would remain unchanged.
All additional revenue generated from the VAT increases would be allocated exclusively to the AHV compensation fund to support financing of the 13th pension payment.
The proposal follows the approval of a popular initiative on 3 March 2024 introducing a 13th state pension payment. The first additional pension payment is scheduled for December 2026, with the associated annual cost estimated at CHF 4.2 billion. The VAT increase is intended to cover part of these additional expenditures.
The measure stems from a proposal submitted by the Federal Council in October 2024. As it requires an amendment to the Federal Constitution, it must be approved through a mandatory referendum involving both the Swiss electorate and the cantons. The referendum is expected to take place in November 2026.
If approved, the Federal Council will determine the date on which the revised VAT rates enter into force. The increase is currently planned to apply from 2028.
