VAT Calculator: Add or Remove VAT
More free tools: VAT calculator · Sales tax calculator · Late fee calculator
How the VAT calculation works
Value Added Tax is a consumption tax used in more than 170 countries. When you add VAT, the tax is calculated on the net amount: a $1,000 net price at 20% VAT becomes $1,200 gross. The formula is simple: gross = net × (1 + rate). When you remove VAT — for example, working backwards from a gross price a supplier quoted you — the formula reverses: net = gross ÷ (1 + rate). So $1,200 gross at 20% VAT means $1,000 net and $200 of VAT embedded in the price.
The preset buttons cover the most common rates worldwide: 5% and 20% are standard in the UK, 10% appears in countries like Australia's GST context and parts of Asia, and 25% is typical in Scandinavia. If your rate isn't listed, type any custom percentage. The result updates live as you type — no buttons to press, no page reloads.
On a real invoice, VAT must appear as its own labeled line with the rate shown, separate from the net total. That's exactly how PayMrBill's invoice generator handles it: add a tax line, label it "VAT," set your rate, and the invoice shows the breakdown the way tax authorities expect. This calculator is a quick companion for checking your numbers before you invoice — it does not provide tax advice, and rates change, so confirm the correct rate for your jurisdiction before billing a client.
Frequently asked questions
How do I calculate VAT backwards from a gross price?
Switch the mode to "Remove VAT." The calculator divides the gross amount by (1 + rate): for example, $1,200 gross at 20% VAT gives $1,000 net, meaning $200 of the price was VAT.
What VAT rate should I use?
It depends entirely on your country and sometimes the type of goods or services. The UK standard rate is 20%, many EU countries sit between 19% and 25%, and reduced rates (often 5–10%) apply to things like food or books in some places. Check your local tax authority — this calculator can't tell you which rate applies to you.
Is VAT the same as sales tax?
They're similar in effect — both are consumption taxes — but they work differently. VAT is collected at each stage of production with businesses reclaiming what they paid; US sales tax is typically charged only at the final retail sale. Our sales tax calculator covers the US side.
Do I need to register to charge VAT?
Generally yes — most countries require registration once your turnover passes a threshold, and only registered businesses may charge VAT. If you're below the threshold, don't add a VAT line to your invoices. When in doubt, ask an accountant.