How much will my monthly spend increase with VAT to 8.3%?

An increase of 0.2 percentage points for ordinary VAT generates an additional cost that varies according to your consumption. For a household that spends CHF 4,000 per month on goods subject to ordinary VAT, the increase is about CHF 8 per month (CHF 100 per year). Reduced VAT goods (food, books, medicines) remain unchanged at 2.5%.

What happens if the referendum blocks the VAT increase?

The army fund would remain active, but Parliament should find alternative sources of funding by 2027. Options would be budget reductions in other sectors or increased federal borrowing. This could delay military investment and reopen political divergences between the Cantons.

When does the army fund come into force?

If approved by both Houses (September and December 2026), the fund becomes operational in 2027. The VAT increase would follow by 2027. A possible referendum could block everything, forcing Parliament to restart the legislative process.

Will the remaining covid credits be reimbursed?

According to the Finance Commission's proposal, 500 million per year of residual credit will go to the army fund instead of repaying covid loans. The covid reimbursement will then be delayed further. This is one of the critical points of the proposal according to Councillor Mühlemann.

How can I calculate the impact of VAT on my personal budget?

You can use the cost of living calculator to estimate how an increase in VAT will affect your annual spending. You can also use the tax calculator to track updated federal VAT rates and plan for major purchases before 2027.

A compromise to fund the army (cross-border guide)

Di Redazione Frontaliere Ticino · Published on 25 August 2026

Lugano cityscape with Swiss urban architecture and lake backdrop.

The Finance Commission of the Council of States approves the plan. Fund with debt of up to 6 billion per year from 2027, financed by an increase in VAT and residual credit.

Context

In a nutshell

Finance Committee approves compromise to finance army
Fund with a maximum annual debt of 6 billion from 2027
Financing: +VAT 0.2 points, credit residuals 500M, surpluses 2026

Key facts

What: Commitment of the Finance Commission for an army fund with borrowing capacity
When: From 2027 (vote: States September, National December 2026)
Where: Swiss Federal Parliament
Who: Finance Commission Council of States, chaired by Eva Herzog
Max debt: 6 billion per year
Sources of financing: VAT increase +0.2 points (800M), credit residuals (500M per year), surpluses 2026 (1 billion)

The Finance Commission of the Council of States has approved a compromise to finance the Swiss army's investments. The decision taken by the Commission, chaired by Eva Herzog, provides for the creation of an ad hoc fund authorised to borrow up to a maximum of six billion per year from 2027.

“We tried to reach the classic compromise,” Herzog explained. “Everyone made a few concessions, without perching on their own red lines.” The compromise traces the structure proposed by the Federal Council, but with specific details on funding.

The plan is divided into three pillars. The first is a billion surpluses foreseen in the 2026 budget. The second consists of credit residuals, estimated at 500 million per year. The third — and most controversial —

Operational details

The 0.2 percentage point VAT increase is at the heart of the dispute. Today in Switzerland the ordinary rate is 8.1%, the reduced rate is 2.5% (groceries, books, medicines) and the special rate is 3.8% (catering). An increase of 0.2 points would bring the ordinary to 8.3%.

Impact on consumption

What does it mean in practice? Each purchase subject to ordinary VAT will cost slightly more. The exact impact depends on your annual spend and the mix of goods purchased. You can use the calcolatore del costo della vita to accurately estimate how the VAT increase will affect your household budget.

The government and the Commission estimate that this increase will generate 800 million a year for the army fund. If approved, the increase will take effect by 2027, in sync with the commencement of the fund's operations. This means that those who buy today can still take advantage of the current rate, but consumer prices will undergo a progressive increase once the new rate comes into force.

The "VAT-free" scenario

If the VAT increase does not pass — in Parliament or in any popular vote — the fund would still be operational, but the two Houses should immediately find a cover. The options are:

Draw on the regular budget with savings plans in other sectors (health, training, public transport)
Raise Federal Debt Above Expected
Use additional taxes (e.g. new tax

Recommended tools

For an updated estimate, use the net salary calculator and the CHF-EUR exchange comparator.

Key points

The parliamentary process is already set. The Council of States votes in September 2026. If it passes, the dossier goes to the House of Representatives in December. If it passes both chambers, the law comes into force — with a probable optional referendum that could intervene.

Official Timeline and Risks

September 2026: Council of States vote
December 2026: House of Representatives vote
2027: Fund enters into force (if confirmed)
Potentially, 2027-2028: Popular referendum if 50,000 signatures are collected

The timeframe is tight. The military has expressed the urgency of advancing investments before global prices rise further. If Parliament passes the law but the people vote no in a referendum, the fund would be dissolved and a new financing would have to start from scratch.

What citizens and businesses should do

Residents of Switzerland do not have immediate action to take. However:

If VAT increases, it is advisable to advance purchases of durable goods (cars, furniture, large appliances) before 2027 to avoid additional tax burden. Those working in Switzerland who track deductible expenses (freelancers, SMEs) will need to recalculate their fixed cost structure.

If the referendum blocks the plan, the government will have to return to Parliament with a new draft law, probably by 2027-2028. In this case, military investments will suffer further delays.

To monitor the evolution and understand the precise impact of VAT on your purchases, you can use the tax calculator on our site, which updates federal VAT rates. You can also consult the cost of living calculator to estimate how a VAT increase will affect your annual spending.

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Frequently Asked Questions

How much will my monthly spend increase with VAT to 8.3%?: An increase of 0.2 percentage points for ordinary VAT generates an additional cost that varies according to your consumption. For a household that spends CHF 4,000 per month on goods subject to ordinary VAT, the increase is about CHF 8 per month (CHF 100 per year). Reduced VAT goods (food, books, medicines) remain unchanged at 2.5%.
What happens if the referendum blocks the VAT increase?: The army fund would remain active, but Parliament should find alternative sources of funding by 2027. Options would be budget reductions in other sectors or increased federal borrowing. This could delay military investment and reopen political divergences between the Cantons.
When does the army fund come into force?: If approved by both Houses (September and December 2026), the fund becomes operational in 2027. The VAT increase would follow by 2027. A possible referendum could block everything, forcing Parliament to restart the legislative process.
Will the remaining covid credits be reimbursed?: According to the Finance Commission's proposal, 500 million per year of residual credit will go to the army fund instead of repaying covid loans. The covid reimbursement will then be delayed further. This is one of the critical points of the proposal according to Councillor Mühlemann.
How can I calculate the impact of VAT on my personal budget?: You can use the cost of living calculator to estimate how an increase in VAT will affect your annual spending. You can also use the tax calculator to track updated federal VAT rates and plan for major purchases before 2027.