Swiss VAT: the 29 November vote on the rise to 8.5%

Article updated on 19 October 2026 with Parliament's decision and the vote date.

On 29 November 2026, Switzerland votes on raising value added tax (VAT) to fund the 13th monthly payment of the AHV pension (the Swiss old-age and survivors' insurance, the country's first pillar of retirement provision). If the vote passes, the standard rate rises by 0.4 points, from 8.1% to 8.5%, at the earliest from the start of 2028. The reduced rate stays as it is, and the hotel rate rises to 4.0%.

If you've read elsewhere about 8.8%, that's because the Federal Council originally proposed an increase of 0.7 points. In Parliament the figure was lowered, and 0.4 is what's now being put to the vote.

Why raise VAT? The link to the 13th AHV payment

The AHV is the first pillar of Swiss social security. In March 2024, voters and the cantons approved the initiative for a 13th monthly pension payment: people receiving an old-age pension will get up to CHF 2,520 more a year, CHF 3,780 for a married couple. The first payment is due in December 2026 and affects around 2.6 million people.

According to the Confederation, the 13th payment will cost more than CHF 4 billion a year at first, and more than CHF 5 billion from 2035. Without additional revenue, the AHV compensation fund would fall below the legal threshold, equal to one year's worth of expenditure, as early as 2027. By 2035 the annual deficit would be close to CHF 5 billion.

The VAT increase would bring in around CHF 1.5 billion a year. It doesn't cover the full cost: with a yes vote, the deficit expected for 2035 falls to around CHF 3 billion, and the rest will have to be addressed in the next AHV reform.

How the VAT rates would change

The rates approved by Parliament and put to the vote are as follows:

• Standard rate: from 8.1% → 8.5%
• Special rate (hotel sector services): from 3.8% → 4.0%
• Reduced rate (food, medicines, books and newspapers): unchanged at 2.6%

The change would come into force at the earliest on 1 January 2028. 2026 and 2027 therefore stay at 8.1%, whatever the outcome of the vote.

The vote on 29 November 2026

VAT rates are set out in the Federal Constitution. Changing them requires a mandatory referendum, with a double majority: a majority of voters and a majority of cantons must both vote yes.

The Federal Council and Parliament recommend a yes vote. For them, VAT is the way to fund the 13th payment by spreading the cost across the whole population, pensioners included. A minority in Parliament is against it: a VAT increase affects purchasing power, and in this minority's view the funding question should be resolved with structural measures in the next AHV reform, for example on the reference retirement age.

What does this mean for Swiss businesses?

For consumers

With a yes vote, goods and services subject to the standard rate would cost around 0.37% more at the same net price. On a purchase of CHF 100 excluding VAT, the total would go from CHF 108.10 to CHF 108.50. Food and medicines stay at 2.6% and don't change.

For businesses

If the increase goes through, there's more than a year to prepare, but it's worth planning ahead. The steps are the same as for the move from 7.7% to 8.1% in 2024:

• update invoicing, accounting and till software with the new rates, effective from the date the change comes into force;
• check services that span the changeover date: what matters is when the service is performed, not the invoice date. Subscriptions, recurring fees and annual contracts should therefore be split between the old and new rate;
• review price lists and prices, deciding whether to pass the increase on to customers or absorb it, and check what existing contracts say about VAT-inclusive prices;
• keep an eye on the flat and net tax rates if you use the simplified method: in 2024 these were also adjusted, and the new figures will be published by the Federal Tax Administration.

If you're still deciding between the effective method and the net tax rate method, we cover this in VAT: effective method or net tax rate, which should you choose.

And if the vote fails?

VAT stays at 8.1% and nothing changes in invoicing. The 13th monthly payment will still be paid out regardless, since it's already written into the Constitution: with a no vote, the only open question is how to fund it. The matter would return to Parliament with the next AHV reform, with other possible routes such as payroll contributions or the reference retirement age.

Conclusion

On 29 November, the decision is whether standard VAT rises from 8.1% to 8.5%, at the earliest from 2028, to fund the 13th AHV payment. For a business, nothing changes before 2028. But if the vote passes, 2027 is the year to update systems, price lists and contracts without rushing.

If you want someone to keep track of the transition and your company's VAT accounting, that's the work we do with our accounting and administration service. We'll update this article with the result of the vote.