June 2026 / Switzerland

On 19 June 2026, the Swiss Parliament approved a constitutional amendment providing for an increase in Value Added Tax rates to help finance the thirteenth pension payment under Switzerland’s old-age and survivors’ insurance scheme (AHV/AVS).

Under the measure approved by Parliament, the standard VAT rate will increase by 0.4 percentage points, from 8.1% to 8.5%, while the special rate applicable to accommodation services will rise by 0.2 percentage points, from 3.8% to 4.0%. The reduced VAT rate, currently set at 2.6% and applicable to essential goods and services such as food and medicines, will remain unchanged.

The additional VAT revenue generated by the increase will be allocated in full to the AHV compensation fund. The measure is intended to contribute to the financing of the thirteenth AHV pension, which was approved by Swiss voters on 3 March 2024 and is due to be paid for the first time in December 2026.

The parliamentary approval does not, however, complete the process. As the measure requires an amendment to the Federal Constitution, the federal decree must be submitted to a mandatory referendum and approved by both the Swiss electorate and a majority of the cantons.

The new rates are expected to apply from 2028, subject to approval in the referendum. The Federal Council will determine the formal date of entry into force.

If approved, the measure would represent the second adjustment to Swiss VAT rates in recent years, following the increase that took effect on 1 January 2024. Even after the proposed adjustment, Switzerland would continue to apply a comparatively low standard VAT rate by European standards.

Companies operating in Switzerland should monitor the outcome of the referendum and begin assessing the potential impact of the proposed changes on pricing, contracts, advance payments, invoicing and accounting systems, and general VAT compliance procedures.