VAT Calculator

What is a VAT Calculator?

A VAT calculator computes the value-added tax (VAT) on goods and services, and it works in both directions. It can add VAT to a net (pre-tax) price to reach the gross total a customer pays, or extract VAT from a gross (tax-inclusive) price to reveal the net amount and the tax portion. Either way you get the full breakdown — net, VAT, and gross — in one step.

Value-added tax is the standard consumption tax in more than 170 countries, including the UK and every EU member state, with rates that differ by country and product category.

How to Use

1. Enter the amount you want to process.
2. Input the VAT rate as a percentage.
3. Choose Add VAT if the amount is net, or Remove VAT if the amount includes tax.
4. Click Calculate to see the net, VAT, and gross amounts.

VAT Formulas

Adding VAT to a Net Price

To add VAT, multiply the pre-tax amount by one plus the tax rate:

gross = net × (1 + rate)

The tax portion by itself is:

VAT amount = net × rate

• net — the price before VAT is applied
• rate — the VAT rate expressed as a decimal (for example, 20% becomes 0.20)
• gross — the final price including VAT

Removing VAT from a Gross Price

To extract VAT from a tax-inclusive amount, divide the gross by one plus the tax rate, then subtract:

net = gross ÷ (1 + rate)

VAT amount = gross − net

• gross — the tax-inclusive price you start with
• rate — the VAT rate expressed as a decimal
• net — the underlying price before VAT

Notice the asymmetry: you add VAT by multiplying, but remove it by dividing — because the rate applies to the net amount, not the gross.

Worked Examples

Example 1: Adding VAT When Invoicing a Client

You bill a client €250.00 for a service and need to add 20% VAT:

1. Convert the rate to a decimal: 20% = 0.20.
2. Calculate the VAT: €250.00 × 0.20 = €50.00.
3. Add it to the net: €250.00 + €50.00 = €300.00.

The invoice total is €300.00 gross: €250.00 net plus €50.00 VAT.

Example 2: Extracting VAT from a VAT-Inclusive Price

You paid £120.00 for an item whose price includes 20% VAT and need the pre-tax figure:

1. Divide the gross by 1 + 0.20: £120.00 ÷ 1.20 = £100.00 net.
2. Subtract to find the VAT: £120.00 − £100.00 = £20.00.

The net amount is £100.00 and the VAT portion is £20.00.

A Common Mistake: Taking 20% of the Gross

Many people try to remove VAT by multiplying the gross by the rate: £120.00 × 20% = £24.00, so they assume the VAT is £24.00 and the net is £96.00. That answer is wrong — the 20% rate was charged on the net price, not on the gross.

You can prove it in reverse: a £96.00 net plus 20% VAT gives £96.00 × 1.20 = £115.20, not the £120.00 actually paid. The true VAT of £20.00 is 20% of the £100.00 net but only about 16.67% of the gross; the VAT share of a tax-inclusive price is always rate ÷ (1 + rate).

Standard VAT Rates by Country

Each country sets its own standard VAT rate:

Most of these countries also apply reduced rates to certain goods and services — such as 5% on home energy in the UK or 7% on food and books in Germany — plus zero-rated or exempt categories. Rates change over time, so confirm the applicable rate with the local tax authority.

VAT vs. US Sales Tax

VAT and US sales tax are both consumption taxes, but collected very differently. With VAT, tax is charged at every stage of the production and distribution chain: each business adds VAT to its sales and reclaims the VAT paid on purchases, remitting only the difference. With US sales tax, the tax is collected once, at the final retail sale.

Prices in VAT countries are usually displayed tax-inclusive, while US prices are quoted before sales tax is added at checkout — and a VAT country has one national standard rate, unlike the thousands of US state and local jurisdictions. For US-style point-of-sale tax, use our sales tax calculator instead.

Input VAT Reclaim for Businesses

If your business is VAT-registered, the VAT you charge customers (output VAT) is collected on behalf of the tax authority, and the VAT you pay suppliers (input VAT) is usually recoverable. Each filing period you remit the difference:

net VAT due = output VAT − input VAT

For example, buy €1,000.00 of materials plus €200.00 input VAT and sell the finished goods for €3,000.00 plus €600.00 output VAT: you owe €600.00 − €200.00 = €400.00 to the tax authority. To reclaim input VAT you must be VAT-registered, hold valid VAT invoices, and the purchases must relate to taxable business activity; some expenses, such as client entertainment, are often blocked. Businesses below the registration threshold generally cannot reclaim VAT.

Frequently Asked Questions