Long considered Europe’s only formally neutral state, Switzerland has announced a major shift in its security posture. The government has declared it needs to substantially strengthen its military capabilities amid a “deteriorating geopolitical situation,” citing threats from cyberattacks, disinformation campaigns, and inadequate readiness.

To fund this expansion, the Swiss administration plans to raise the value-added tax (VAT) by 0.8 percentage points from the current rate of 8.1% for ten years starting in 2028. The additional revenue will be allocated specifically to modernize the armed forces, missile defenses, cybersecurity infrastructure, and border protection systems.

The move marks a significant departure from Switzerland’s historical policy of neutrality. For decades, the country has avoided foreign military alliances, stayed out of major conflict zones, and maintained a militia-based defense force. However, in recent years, Bern has increasingly abandoned strict neutrality by expanding security cooperation with NATO, deepening defense ties with the European Union, supporting Ukraine in the conflict against Russia, and implementing sanctions on Moscow.

In a statement released Wednesday, Swiss authorities emphasized that the “deteriorating geopolitical situation” requires immediate action to bolster national security. The government estimates it will need 31 billion Swiss francs ($40.4 billion) for these upgrades, with spending projected to rise from its current level of around 0.7% of GDP to 1.5% by the time the tax increase takes effect.

The new defense budget would cover critical areas including short-range missile defense, anti-drone systems, information technology, intelligence gathering, early warning mechanisms, and civilian security measures. Under Swiss law, the VAT hike requires parliamentary approval and a national referendum. The government aims to draft the legislation by March, submit it to parliament this autumn, and hold a referendum in summer 2027.

Analysts warn that public support for increased military spending could be limited. A recent IPSOS survey found only 31% of Swiss citizens favor higher defense expenditures—the lowest in Europe compared with 60% in Germany and 53% in France.

The decision comes as Western nations increasingly invoke the perceived “Russian threat” to justify substantial defense spending increases, including pledges by European NATO members to reach 5% of GDP. Russia has dismissed such claims as baseless fearmongering, warning that “rabid militarization” risks a broader continental conflict. Russian Foreign Minister Sergey Lavrov further accused Switzerland of “forfeiting” its neutrality by aligning with Western policies on the Ukraine conflict and labeling it an “openly hostile state.”