Key takeaways
- Switzerland plans to raise its standard VAT rate from 8.1% to 8.8% in 2026 to fund a 13th monthly pension payment.
- The increase is expected to generate CHF 4.2 billion to support pension finances through 2030.
- Reduced and accommodation VAT rates will also rise slightly, pending Parliament approval and a public vote in 2025.
The Swiss Federal Council has announced plans to raise its standard VAT rate from the current 8.1% to 8.8% to help fund a 13th monthly payment for pensioners. Approved by the Swiss Cabinet on October 16, the increase is expected to take effect in 2026 and aims to bring in an additional CHF 4.2 billion to support pension finances until 2030.
Earlier this year, Switzerland already adjusted its VAT from 7.7% to 8.1% to close pension funding gaps, but recent developments highlighted the need for further increases. Alongside raising the standard VAT rate, the special rate for the accommodation sector is set to increase from 3.8% to 4.2%, and the reduced rate on everyday goods from 2.6% to 2.8%.
Parliament is set to finalize the proposal by March 2025, followed by a public vote in September 2025.
Frequently asked questions
When will Switzerland’s new VAT rate increase take effect?
Switzerland’s proposed VAT rate increase from 8.1% to 8.8% is expected to take effect in 2026. The proposal will go to Parliament by March 2025 and then to a public vote in September 2025 before being finalized.
What other Swiss VAT rates are changing in 2026?
Alongside the standard rate, the accommodation VAT rate will rise from 3.8% to 4.2%, and the reduced VAT rate on essential goods will increase from 2.6% to 2.8%. These changes aim to strengthen pension funding and support the 13th monthly payment for retirees.
