Switzerland Federal Council Adopts Dispatch on Temporary VAT Increase for Defense Spending

The Swiss Federal Council adopted a dispatch on 12 August 2026 proposing a temporary increase in VAT rates to finance additional defense expenditure. The increase would apply from 1 January 2028 for a period of 12 years.

Under the proposal, the standard VAT rate would increase by 0.5 percentage points, from the current 8.1% to 8.6%, while the special rate for accommodation services would increase by 0.3 percentage points, from 3.8% to 4.1%. The reduced VAT rate of 2.6%, which applies to cer…