VAT formulas

Adding VAT: VAT amount = Net price × Rate, and Gross price = Net price × (1 + Rate)
Removing VAT: Net price = Gross price ÷ (1 + Rate), and VAT amount = Gross price − Net price

Net price is the price before VAT, Gross price is the price including VAT, and Rate is the VAT rate as a decimal — 20% becomes 0.20. The two operations are exact inverses, so removing VAT from a gross price returns the original net price.

How the calculation works

Step 1 (add VAT): VAT amount = net price × rate. Gross price = net price + VAT amount. Step 2 (remove VAT): Net price = gross price ÷ (1 + rate). VAT amount = gross price − net price.

Worked examples

Example 1 (add VAT): Net price $200, VAT rate 20%. VAT = $200 × 0.20 = $40. Gross price = $200 + $40 = $240.

Example 2 (remove VAT): Gross price $240, VAT rate 20%. Net price = $240 ÷ 1.20 = $200. VAT = $240 − $200 = $40.

Example 3: Net price $100 at 20% VAT → VAT $20, total $120.

Example 4 (add VAT): Net price $84.99, VAT rate 20%. VAT = 84.99 × 0.20 = $17.00 (rounded from $16.998). Gross price = 84.99 + 16.998 = $101.99.

Example 5 (remove VAT, EUR): Gross price €59.50, VAT rate 19%. Net price = 59.50 ÷ 1.19 = €50.00. VAT = 59.50 − 50.00 = €9.50.

Example 6 (remove VAT): Gross price $330, VAT rate 10%. Net price = 330 ÷ 1.10 = $300. VAT = 330 − 300 = $30.

Common standard VAT rates

United Kingdom 20%, France 20%, Germany 19%. Rates vary by country and by product category (many countries have reduced rates for food, books, or medicine), so always confirm the rate that applies to your item.

Reduced VAT rates

Country	Standard rate	Reduced rate(s)
United Kingdom	20%	5%
France	20%	10%, 5.5%
Germany	19%	7%

Note: VAT rates change over time, and reduced rates apply only to specific goods and services. Always confirm the current rate with the country’s tax authority before charging or reclaiming VAT.

Sources

EU VAT rates: European Commission — VAT rates. UK VAT rates: GOV.UK — Rates of VAT on different goods and services.

FAQs

What is VAT?

Value Added Tax is a consumption tax charged on goods and services in many countries. It is included in the price the buyer pays and collected by the seller for the government.

How do you add VAT to a price?

Multiply the net price by the VAT rate and add the result: gross = net × (1 + rate).

How do you remove VAT from a price?

Divide the gross price by (1 + rate) to get the net price; the difference is the VAT amount.

What is the difference between VAT and sales tax?

VAT is collected at each stage of production with credits for tax already paid, while a sales tax is charged only once, at the final sale to the consumer.

Which countries use VAT?

More than 170 countries use VAT, including every EU member state, the UK, Canada, Australia, and Japan. The United States is a notable exception and relies on retail sales taxes instead. Standard rates range from about 5% in some countries to 25% or more in parts of Europe.

What is the difference between VAT and GST?

VAT and GST (Goods and Services Tax) are the same kind of staged consumption tax, and the two names are often used interchangeably. Australia, Canada, and India call their tax GST, while the EU and the UK call it VAT. In both systems, businesses charge the tax on sales and reclaim the tax paid on their purchases.

Who actually pays VAT?

The final consumer bears the cost of VAT because it is built into the retail price. Businesses act as collectors: they charge VAT on their sales and reclaim the VAT they paid on their inputs. That is why invoices show net and gross amounts separately for VAT-registered businesses.

Disclaimer: Results are general information only, not tax advice. Confirm the VAT rate for your country and product category.

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Last updated: November 1, 2026.