VAT Calculator
Calculate Value Added Tax - add VAT to net price or extract VAT from gross price
VAT Calculation Formulas
Understanding Value Added Tax (VAT)
Value Added Tax (VAT) is a consumption tax placed on products and services at each stage of production or distribution. Unlike sales tax which is only applied at the final sale, VAT is collected incrementally throughout the supply chain, with each business paying VAT on their purchases and collecting VAT on their sales.
VAT is used in over 160 countries worldwide, including all European Union member states, the United Kingdom, Canada (as GST/HST), Australia (as GST), and many Asian countries. The United States is notable for not having a federal VAT system, instead using state-level sales taxes.
For consumers, VAT appears as an additional cost on purchases. For businesses, VAT is generally neutral since they can reclaim the VAT paid on business purchases against the VAT collected on sales, effectively only remitting the 'value added' portion to the government.
VAT Rates Around the World
VAT rates vary significantly between countries and often include multiple rate tiers for different product categories.
| Country | Standard Rate | Reduced Rate | Notes |
|---|---|---|---|
| United Kingdom | 20% | 5% | 0% for essential food, children's clothing |
| Germany | 19% | 7% | Reduced rate for food, books |
| France | 20% | 5.5%, 10% | Multiple reduced rates |
| Italy | 22% | 4%, 10% | Super-reduced for essentials |
| Spain | 21% | 10% | 4% for bread, milk, medicine |
| Hungary | 27% | 5%, 18% | Highest in EU |
| Luxembourg | 17% | 8% | Lowest standard rate in EU |
| Australia (GST) | 10% | 0% | Flat rate, essentials exempt |
| Canada (GST) | 5% | Varies | Provincial HST adds more |
| Japan | 10% | 8% | Reduced for food |
Types of VAT Calculations
Adding VAT
Start with net price, multiply by (1 + VAT rate). £100 + 20% VAT = £120 gross.
Removing VAT
Divide gross by (1 + VAT rate). £120 ÷ 1.20 = £100 net price.
Finding VAT Amount
From gross: multiply by (VAT rate ÷ (100 + VAT rate)). £120 × (20/120) = £20 VAT.
Invoice Breakdown
Always show net, VAT, and gross separately on business invoices for compliance.
VAT for Businesses
Registration Threshold
Most countries require VAT registration once turnover exceeds a threshold. UK: £85,000. Germany: €22,000. Some countries have no threshold.
Input Tax Recovery
Registered businesses reclaim VAT paid on business expenses. Keep all invoices showing VAT for your records.
Cross-Border Sales
B2B exports are typically zero-rated. B2C sales to EU consumers follow destination country rates (OSS scheme).
Filing Deadlines
VAT returns are typically quarterly or monthly. Late filing incurs penalties and interest in most jurisdictions.
Frequently Asked Questions
What's the difference between VAT and sales tax?
VAT is collected at every stage of production and allows businesses to reclaim tax on inputs. Sales tax is only collected at the final sale to consumers. VAT is generally considered more efficient and harder to evade.
How do I calculate VAT backwards from a gross price?
Divide the gross price by (1 + VAT rate as decimal). For 20% VAT: £120 ÷ 1.20 = £100 net. The VAT amount is £120 - £100 = £20.
Are all products subject to VAT?
No. Most countries have exemptions (no VAT, can't reclaim input VAT) and zero-rated goods (0% VAT, can reclaim input VAT). Common exemptions include financial services, education, and healthcare.
Do I need to charge VAT on exports?
Exports to non-VAT countries are typically zero-rated. Within the EU, B2B sales use the reverse charge mechanism. Rules vary by destination, so consult local regulations.
Pro Tips
- Bookmark this calculator for quick access in the future
- Use the share button to send your results to others
- Try different scenarios to compare outcomes
- Check out our related calculators for more insights
Found this calculator helpful? Share it with others: