Value Added Tax (VAT) is a consumption tax applied at each stage of production and distribution. Understanding how to calculate VAT correctly is essential for businesses, freelancers, and consumers alike.
What Is VAT?
VAT is an indirect tax charged on goods and services. Unlike sales tax, VAT is collected at every stage of the supply chain. The end consumer ultimately bears the cost, but businesses along the chain collect and remit it.
How to Calculate VAT
Adding VAT to a Price
To add VAT to a net price, multiply by1 + (VAT rate / 100).
Example: Net price = $100, VAT rate = 20%
Removing VAT from a Price
To find the net price from a VAT-inclusive amount, divide by1 + (VAT rate / 100).
Example: Gross price = $120, VAT rate = 20%
Common VAT Rates Worldwide
| Country | Standard Rate | Reduced Rate |
|---|---|---|
| United Kingdom | 20% | 5% |
| Germany | 19% | 7% |
| France | 20% | 5.5% |
| Turkey | 20% | 1%, 10% |
| Canada (GST) | 5% | — |
| Australia (GST) | 10% | — |
VAT Calculation Formulas
| Operation | Formula |
|---|---|
| Add VAT | Net × (1 + Rate/100) |
| Remove VAT | Gross / (1 + Rate/100) |
| Find VAT Amount | Gross - Net |
| Find VAT Rate | (VAT Amount / Net) × 100 |
Try It Yourself
Calculate VAT instantly with our free VAT Calculator. Enter any amount and VAT rate to get results in real time.