On June 19, 2026, the Swiss Parliament approved a constitutional amendment providing for an increase in value-added tax rates to help finance the 13th pension payment under the Swiss Old-Age and Survivors’ Insurance (AVS).
According to 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 services in the hospitality sector will increase 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 medicine, will remain unchanged.
The additional VAT revenue generated by the increase will be allocated in full to the AVS Compensation Fund. The measure is intended to help finance the 13th AVS pension, which was approved by Swiss voters on March 3, 2024, and for which the first payment is scheduled for December 2026.
However, parliamentary approval does not complete the process. Since the measure requires an amendment to the Federal Constitution, the federal decree must be subject to a mandatory referendum and approved by both the Swiss people and a majority of the cantons.
The new rates are expected to take effect starting in 2028, subject to approval in a referendum. The Federal Council will formally set the effective date.
If approved, the measure would represent the second adjustment to Swiss VAT rates in recent years, following the increase that took effect on January 1, 2024. Even after the planned adjustment, Switzerland would continue to apply a standard VAT rate that is comparatively low by European standards.
Businesses operating in Switzerland should monitor the outcome of the referendum and begin assessing the potential impact of the proposed changes on prices, contracts, advance payments, invoicing and accounting systems, and, more generally, on VAT compliance obligations.