Swiss government proposes 0.5% VAT hike to finance defence spending

Following criticism, the Federal Council has scaled back a planned increase in the VAT rate to fund the armed forces. It proposes 0.5% rather than 0.8% as originally planned; this would remain in force for 12 years, not 10.

The standard rate (for the hotel industry) is to be increased by 0.3 percentage points. The reduced rate, which applies to foodstuffs and medicines, remains unaffected. This will help to minimise the impact on the public and improve the proposal’s acceptance by parliament and citizens, the Federal Council said on Wednesday.

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Swiss parties skeptical about VAT hike for army spending

This content was published on

May 31, 2026


A government-proposed VAT hike to finance defence spending has been poorly received in a consultation process.

Read more: Swiss parties skeptical about VAT hike for army spending

The additional revenue will be allocated in full to military expenditure. It will cover price increases in the field of armaments and the requirements for developing the army’s defence capabilities.

The potential purchase of a second ground-to-air defence system is also to be covered by this increase, as are the additional costs associated with the Patriot defence system.

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Swiss Politics

Value added tax: the Swiss government’s all-purpose tool

This content was published on

Jan 28, 2026


Switzerland has the lowest VAT rate in Europe. Now the Swiss government wants to increase it to pay for national defence.

Read more: Value added tax: the Swiss government’s all-purpose tool

Translated from French, sub-edited by sb