Currently, under the Swiss penal code, discrimination against people on the grounds of their race, ethnic origin or religious beliefs is an offence, with the maximum penalty being three years in prison or a fine.
But in a statement released on Wednesday, the legal affairs committee of the Swiss upper house, the Council of States, recommended that article 261bis of the penal code be changed to also make discrimination on the basis of sexual orientation and sexual identity illegal.
The committee's final recommendation comes a full five years after Socialist MP Mathias Reynard introduced a parliamentary motion on the issue.
With the move, the parliamentary legal committee has gone a step further than the Swiss government which had backed the inclusion of sexual orientation, but not sexual identity, in the legislation.
Outlining its decision to also include sexual identity, the commission said transsexuals and intersex people were the victims of hate crimes alongside homosexuals or bisexuals.
Roman Heggli of Swiss LGBT rights group Pink Cross welcomed the news.
“This is not just a big legal step forward: it also has enormous repercussions for our society. It underscores the acceptance of gays and lesbians, and of trans and intersex people,” he said.
Switzerland continues to rank relatively poorly on LGBTI issues with the country placing 22nd among 49 countries in the 2018 rankings compiled by LGBTI advocacy group ILGA-Europe.
The group praised Switzerland for the introduction of the option of stepchild adoption for civil partners and cohabitants. It also noted that a number of new studies meant NGOs now had data on the discrimination faced by LGBTI school children, and on older members of the community.
But ILGA-Europe criticised the Swiss federal council for failing to roll out a comprehensive national LGBTI action plan, as per their recommendation.
Gay marriage is not legal in Switzerland, though same-sex couples can enter into a civil partnership after the move was approved in a 2005 referendum. However, these couples do not enjoy full equality with married couples on issues including adoption and fertility treatment.
A Swiss parliamentary legal affairs committee is currently looking at the issue of same-sex marriage with a draft bill set to be drawn up by mid-2019.