VAT Calculator

Calculate Value Added Tax (VAT) - add VAT to prices or remove VAT from totals.

Add VAT: Gross = Net x (1 + VAT%); Remove VAT: Net = Gross / (1 + VAT%); VAT Amount = Gross - Net
£100 + 20% VAT = £120 total (£20 VAT); £120 removing 20% VAT = £100 net (£20 VAT)

What is VAT and how does it work?

VAT (Value Added Tax) is a consumption tax added at each production stage, ultimately paid by end consumer. Used in 170+ countries (not US - we use sales tax). Standard VAT rates: UK 20%, EU 17-27%, Canada 5% (GST), Australia 10% (GST). Unlike sales tax, VAT is collected throughout supply chain, with businesses reclaiming VAT paid on inputs. More efficient but complex to administer.

How do I remove VAT from a price?

Divide gross price by (1 + VAT rate). Example: £120 total with 20% VAT = £120 / 1.20 = £100 net price, £20 VAT. Quick mental math for 20%: divide by 6 to get VAT (£120/6 = £20). For 10%: divide by 11. Businesses need to remove VAT from receipts to claim input tax credits on expenses.

What is the difference between VAT and sales tax?

VAT: Applied at each production stage, businesses reclaim input VAT, included in display prices (Europe), complex admin. Sales tax: Applied only at final sale, not reclaimable, added at checkout (US), simpler. Consumer pays same either way, but VAT reduces tax evasion and is more efficient. US retailers prefer sales tax simplicity; international business favors VAT standardization.

Are there VAT exemptions?

Common VAT exemptions (vary by country): Essential foods (groceries), children's clothing, books/newspapers, education, healthcare, financial services, charity activities. Zero-rated (0% VAT) vs exempt (no VAT): Zero-rated can reclaim input VAT, exempt cannot. Small businesses often exempt if below threshold (UK: £85k revenue). Luxury items always subject to full VAT.