Adding and Removing VAT: The Formulas
Adding tax to a net price is simple multiplication. Removing tax from a gross price is where people often go wrong: you cannot just subtract the percentage, because the tax was calculated on the smaller net amount.
Add tax: Gross = Net × (1 + rate)
Remove tax: Net = Gross ÷ (1 + rate)
Tax amount: Gross − NetWorked Example at 20%
- Adding: a $100 net price becomes $100 × 1.20 = $120, of which $20 is tax.
- Removing: a $120 gross price contains $120 ÷ 1.20 = $100 net and $20 tax.
- Common mistake: taking 20% off $120 gives $96 — which would understate the net price by $4.
VAT vs. US Sales Tax
VAT (value-added tax) is charged at every stage of production and distribution, with businesses reclaiming the VAT they paid on inputs. Prices shown to consumers in VAT countries usually include the tax. US sales tax is charged once, at the final sale, and is normally added at the register on top of the shelf price. The arithmetic is the same, so this calculator works for both — just enter the combined state and local rate for US sales tax.
Standard Rates in Selected Countries
Standard rates change from time to time, and most countries also have reduced rates for items such as food or books. Always confirm the current rate with the local tax authority.
- United Kingdom: 20%
- Germany: 19%
- France: 20%
- Türkiye: 20%
- Netherlands: 21%
Who Uses a VAT Calculator
- Freelancers and small businesses writing invoices that must show net, tax and gross amounts.
- Shoppers comparing prices listed with and without tax.
- Bookkeepers splitting receipts into net cost and reclaimable VAT.