What is the formula to calculate VAT?

To add VAT to a net price, the mathematical formula is: Gross Price = Net Price × (1 + VAT Rate ÷ 100).

How do you calculate VAT backwards (Reverse VAT)?

To extract or remove VAT from a gross total price, divide the total price by (1 + VAT Rate). For example, if a £120 item includes 20% VAT, the reverse calculation is £120 ÷ 1.20 = £100 Net Price. The VAT amount is £20.

What is the difference between Net Amount and Gross Amount?

The 'Net Amount' is the base price of a product or service before any taxes are applied (VAT exclusive). The 'Gross Amount' is the final, total price paid by the consumer after the tax has been added (VAT inclusive).

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A Guide to Calculating VAT (Value Added Tax)

Tired of confusing tax math? Whether you are a business owner generating invoices, an accountant reconciling expenses, or a consumer double-checking a receipt, calculating VAT correctly is essential. Value-Added Tax (VAT) is a consumption tax used in over 160 countries worldwide.

This free VAT calculator instantly solves the two most common tax math problems: adding VAT on top of a base price, or mathematically "extracting" the hidden VAT amount from a final receipt total.

VAT Calculation Formulas Explained

If you need to perform the math manually in a spreadsheet, here are the standard global formulas:

Formula to Add VAT

To find the final total price after tax, multiply the net price by 1 plus the VAT percentage decimal.

Formula: Gross Price = Net Price × (1 + (VAT Rate ÷ 100))
Example: For a $100 item with 20% VAT, the calculation is $100 × 1.20 = $120.

Formula to Remove VAT (Reverse Calculation)

If you have a receipt for $120 and know the tax was 20%, you cannot just calculate 20% of $120 and subtract it (that would give you $96, which is incorrect). You must extract the tax backwards.

Formula: Net Price = Gross Price ÷ (1 + (VAT Rate ÷ 100))
Example: To find the pre-tax price of a $120 item that includes 20% VAT, calculate $120 ÷ 1.20 = $100. The actual tax paid was $20.

Standard VAT Rates by Country (2025)

VAT (or its equivalent, such as GST) rates vary wildly by jurisdiction. While our calculator works for any custom rate, here is a reference list of standard rates in several major economies. Please note that many countries have reduced rates for essential goods like food and medical supplies.

Country	Tax Name	Standard Rate
United Kingdom	VAT	20%
Germany	MwSt / VAT	19%
France	TVA / VAT	20%
Ireland	VAT	23%
Canada (Federal)	GST	5% (Plus provincial)
Australia	GST	10%
New Zealand	GST	15%

Frequently Asked Questions (FAQ)

What is the difference between VAT and US Sales Tax?

While the end consumer pays the burden of both, the collection mechanism is totally different.

VAT (Value-Added Tax) is collected fractionally at every single stage of the supply chain (manufacturing, wholesale, retail), and businesses can reclaim the VAT they pay on their inputs. US Sales Tax is a single-stage tax, collected only once at the final point of sale to the retail consumer.

What does 'Net Amount' mean?

The Net Amount is the pure base price of a product or service before any taxes or duties have been applied. On business-to-business (B2B) invoices, prices are usually quoted as Net. It is also referred to as the 'VAT exclusive' price.

What does 'Gross Amount' mean?

The Gross Amount is the final, total price after VAT has been fully added. It is the absolute cash amount a consumer must pay at the register. It is also known as the 'VAT inclusive' price.