VATHow to calculate VAT: formulas and examples
The three formulas you need to add VAT, remove VAT and find the VAT amount — with worked examples and the mistakes to avoid.
1. Add VAT to a net price
Gross = Net × (1 + rate/100)
Example at 22%: 250 × 1.22 = 305. The VAT is 305 − 250 = 55.
2. Remove VAT from a gross price
Net = Gross ÷ (1 + rate/100)
Example at 21%: 121 ÷ 1.21 = 100 net, so the VAT is 21.
3. Find only the VAT amount
VAT from net = Net × rate/100
VAT from gross = Gross × rate/(100 + rate)
Example: the VAT inside a gross price of 120 at 20% is 120 × 20/120 = 20.
The most common mistake
Subtracting the rate from the gross price does not give the net price. At 20%, 120 − 20% = 96, but the correct net price is 100. The VAT share of a gross price is always lower than the rate: 16.67% at 20%, 18.03% at 22%, 15.97% at 19%.
| Rate | Multiply net by | VAT share of gross |
|---|---|---|
| 5% | 1.05 | 4.76% |
| 7% | 1.07 | 6.54% |
| 8% | 1.08 | 7.41% |
| 10% | 1.10 | 9.09% |
| 15% | 1.15 | 13.04% |
| 18% | 1.18 | 15.25% |
| 19% | 1.19 | 15.97% |
| 20% | 1.20 | 16.67% |
| 21% | 1.21 | 17.36% |
| 22% | 1.22 | 18.03% |
| 23% | 1.23 | 18.70% |
| 24% | 1.24 | 19.35% |
| 25% | 1.25 | 20.00% |
| 27% | 1.27 | 21.26% |
Rounding
Most countries round VAT to the smallest currency unit (two decimals for EUR, GBP or USD; none for JPY or KRW). Rounding per line or on the invoice total can give slightly different results, and local rules decide which method is required. Use the decimals selector in the calculator to match your invoice.
VAT, GST and sales tax
VAT and GST work the same way: every business in the chain charges tax on its sales and deducts the tax paid on its purchases, so only the final consumer bears the full cost. A sales tax, as in the United States, is charged only once on the final sale.