How to calculate VAT
Adding VAT and extracting VAT from a tax-inclusive price are not the same operation. The gross price already contains the tax fraction.
Calculate VATAdd tax to a net amount instantly.VAT formulas
Gross price equals net price × (1 + VAT rate ÷ 100). To find the net price from gross, divide gross by (1 + rate ÷ 100). VAT is the difference.
Worked example
At 20% VAT, a net price of 100 becomes 120 gross. From a gross price of 120, dividing by 1.20 returns a net price of 100 and VAT of 20.
VAT questions
Why not subtract 20% from a VAT-inclusive price?
Because the 20% was calculated on the smaller net amount, not on the gross amount.
Which VAT rate should I use?
Use the current rate for the product, service and jurisdiction involved.