Bern, 28 January 2026 — In view of the deteriorating geopolitical situation, the Federal Council intends to substantially strengthen Switzerland’s security and defence. This will require additional funding of around CHF 31 billion – for both civilian federal authorities with security-related tasks and the armed forces. To finance this effort, the Federal Council proposes a temporary, earmarked increase in value-added tax (VAT) of 0.8 percentage points from 2028 for a period of ten years. These additional revenues will be allocated to an armaments fund. Together with the 2027 consolidation package, this will create the basis for a balanced federal budget. At its meeting on 28 January 2026, the Federal Council instructed the Federal Department of Defence, Civil Protection and Sport (DDPS) to prepare a draft for interdepartmental consultation by the end of March.
The global security situation and Switzerland’s geopolitical environment have steadily deteriorated in recent years. The world has become more volatile and uncertain, and the international order based on international law is under severe strain. A number of countries in Europe are responding by rapidly strengthening their defence capabilities. Switzerland is also affected by these developments and is already facing hybrid forms of conflict, including cyberattacks and disinformation. In addition, due to spending cuts over past decades, the armed forces are not sufficiently equipped to adequately address the most likely threats in particular – long-range attacks and hybrid conflicts. In order to protect the population and the country, and to ensure that Switzerland does not become a security risk within Europe’s defence architecture, additional financial resources are therefore required; the planned increase in military spending to 1% of GDP by 2032 is insufficient for this purpose.
Prioritisation of defence procurement by the armed forces
To protect Switzerland against long-range attacks and hybrid conflicts, the armed forces have re-prioritised their armaments planning within the existing budget framework. This makes it possible to close the most urgent gaps in defence against likely threats more quickly. For example, new short-range ground-based air defence systems, systems to counter mini-drones, and additional medium-range ground-based air defence systems are being brought forward and included in the Armed Forces Dispatches for 2026 and 2027. Investments in information technology, cyber protection, and electromagnetic reconnaissance and defence are also being given priority.
This prioritisation makes it possible, within the available financial resources, to improve protection against the most likely threats through the 2030s. However, this protection is not yet comprehensive.
Tight armaments market: rising prices and high advance payments
A key challenge is that the financial resources included in the current budget and financial plan no longer reflect the realities of the armaments market. Defence equipment is becoming steadily more expensive, by up to 40% (due to inflation and increased demand). In addition, advance payments of at least one third of the purchase price are generally required. Without adjusting financial resources to this new price reality, the development of capabilities would be reduced, which would have a negative impact on the protection of the population and the country against threats. Specifically, fewer critical infrastructures and densely populated areas could be protected.
Additional revenues for the armed forces and civilian federal authorities with security responsibilities
For these reasons, additional financial resources are needed to strengthen Switzerland’s security and defence. This need does not relate solely to investments in armaments. Comprehensive protection of the country also requires the development and expansion of capabilities among civilian federal authorities with security-relevant tasks. Military protection is only effective to a limited extent without intelligence services, civil warning systems, internal security (police and border protection), secure communications, or resilient crisis management capacities.
The Federal Council notes that this additional funding requirement will amount to around CHF 31 billion from 2028 onwards. These funds must be financed through additional revenues, as there is no fiscal room in the federal budget and the debt brake must be respected. The Federal Council has therefore examined various options and concluded that an increase in VAT is preferable to other alternatives in view of its impact on the economy and society.
Temporary VAT increase of 0.8 percentage points for ten years
An increase in VAT requires an amendment to the Federal Constitution. The Federal Council has therefore instructed the DDPS to submit a draft for consultation by the end of March 2026. VAT is to be temporarily increased by 0.8 percentage points from 2028 for a period of ten years. These revenues will be earmarked for strengthening Switzerland’s security and defence and will be used on a priority basis for the armed forces’ armaments expenditure. One third of these revenues will be used to co-finance the planned increase in military spending to 1% of GDP, thereby relieving pressure on the rest of the federal budget. Together with this use of revenues and the 2027 consolidation package (EP27), the basis for a sustainably balanced federal budget will be created – provided that EP27 is implemented as comprehensively as possible.
It is envisaged that the dispatch will be submitted to Parliament in the autumn. A popular vote could take place in summer 2027, and the VAT increase could enter into force on 1 January 2028.
Armaments fund for rapid procurement
The Federal Council intends to allocate the additional revenues on an earmarked basis to an armaments fund dedicated to Switzerland’s security and defence. The legal basis is to enter into force at the same time as the VAT increase. The fund will be financed by the additional VAT revenues and by a contribution from the regular armed forces budget. In order to cover peak payment requirements for priority procurements, the fund may incur debt with the federal treasury up to twice the amount of the annual earmarked additional revenues. By the end of the period of the VAT increase, all debts must be fully repaid. The Federal Council has already used funds in other important policy areas, such as the National Roads and Agglomeration Transport Fund (NAF) or the Network Surcharge Fund.
The DDPS will also submit a draft for consultation to the Federal Council on this armaments fund by the end of March.