VAT Calculator

What VAT is, and why it is not a sales tax

Value added tax is charged on each sale in a supply chain, and each business in the chain reclaims the VAT it paid on its own purchases. The tax ends up on the final consumer, but it is collected in stages, which is why an invoice shows a net figure, a VAT figure and a gross figure.

Most countries that use VAT require the tax-inclusive price to be the one shown to shoppers. A shelf label of 12 in Germany already contains the 19 percent tax, and the customer never adds it at the register. That is the opposite of the American habit, where the price on the shelf is the pre-tax figure and the sales tax appears at checkout.

The United States has no federal VAT. It relies on state and local sales tax, which is charged once at the point of sale to the final buyer and generally not on business-to-business purchases that are resold. The mechanics differ enough that a VAT calculator and a sales tax calculator are not interchangeable, even though both start from a price and a percentage.

One practical consequence: in a VAT country the number on the invoice is what the buyer pays. In the US the number at checkout is the shelf price plus tax. Mixing the two conventions is the source of most confusion when a US buyer looks at a European invoice.

Adding VAT to a net price

To go from a net price to a gross price, multiply by one plus the rate as a decimal.

Gross = net x (1 + rate)

A consulting fee of 250 at the UK standard rate of 20 percent gives 250 x 1.20 = 300. The VAT itself is the difference, 300 minus 250, which is 50, and it is also 250 x 0.20 = 50.

The table makes the spread visible: the same 100 of net sales becomes 105 or 127 depending on the country, a 22 point difference in the tax line. When you quote a cross-border price, the rate that matters is the one where the customer is located, not the one where you are.

Removing VAT from a gross price

Going the other way is division, not subtraction. Multiplying a gross price by 0.80 to strip out a 20 percent rate is the most common VAT mistake, and it always overstates the net price.

Net = gross / (1 + rate)

Take a gross price of 300 at 20 percent. 300 / 1.20 = 250, and the VAT is 300 minus 250, which is 50. The wrong method, 300 x 0.80, gives 240 and invents 10 of extra net that does not exist.

The share of the gross price taken by VAT is not the headline rate. For 20 percent it is 50 / 300 = 16.67 percent. The general form is rate / (1 + rate), so 0.20 / 1.20 = 0.1667, and for a 5 percent rate it is 0.05 / 1.05 = 4.76 percent.

A smaller example with awkward numbers: a 99 gross price at 20 percent is 99 / 1.20 = 82.50 net, with 16.50 of VAT. Rounding the net to 82.50 keeps the invoice balanced, and 82.50 x 1.20 = 99.00 confirms it.

Worked example: one invoice, three rates

A UK shop sells three lines on one invoice, and each line falls in a different VAT band. This is where a single blended rate on the total goes wrong.

• Consulting hours, standard rated: 1,200 net, VAT 1,200 x 0.20 = 240.
• Children's car seats, reduced rated: 180 net, VAT 180 x 0.05 = 9.
• Printed books, zero rated: 60 net, VAT 60 x 0 = 0.

The invoice totals are net 1,200 + 180 + 60 = 1,440, VAT 240 + 9 + 0 = 249, and gross 1,440 + 249 = 1,689. The effective rate on the whole invoice is 249 / 1,440 = 17.29 percent, a number that appears nowhere in the tax law and should never be printed as the rate.

Zero rated is not the same as exempt. A zero-rated sale still counts as a taxable supply, so the seller can reclaim VAT on the costs behind it. An exempt sale usually blocks that reclaim, which matters more than the 0 percent on the invoice suggests.

What a business pays over

A VAT-registered business is a collector, not a payer. It charges VAT on sales, which is output VAT, and reclaims VAT on purchases, which is input VAT. The amount sent to the tax authority is the difference.

On the invoice above, output VAT is 249. Suppose the shop also bought 420 of shelving and stationery at 20 percent, so input VAT is 420 x 0.20 = 84. The payment is 249 minus 84 = 165.

If input VAT exceeds output VAT in a period, the difference is normally refunded or carried forward, depending on the country. A business that exports most of its output often sits in that position, because exports are usually zero rated while the costs behind them still carry VAT.

This is why a consumer calculator and a business calculator answer different questions. The consumer wants the gross price. The business wants the net price, the output VAT, the input VAT it can reclaim, and the balance due. A price that includes VAT is not income: booking the gross figure as revenue overstates sales by the VAT share, and the tax authority will notice.

Standard rates in 2026

Rates are set by each country and change with budgets, so treat any table as a snapshot. The figures below come from the European Commission's VAT rules and rates page, last checked 13 July 2026, and from GOV.UK's VAT rates page for the United Kingdom.

Two rules sit above the national tables inside the EU. A standard rate cannot be lower than 15 percent, and a reduced rate cannot be lower than 5 percent, apart from a short list of legacy super-reduced and zero rates that a few member states kept. The UK standard rate has been 20 percent since 4 January 2011, when it rose from 17.5 percent.

Temporary rates exist too. HMRC applied a 5 percent rate to certain children's meals, admission tickets and family attractions for supplies between 25 June and 1 September 2026, after which the standard 20 percent returned. A calculator that only knows the headline rate will overstate the VAT on those invoices, so check the supply date as well as the country.

Mistakes that produce the wrong VAT

Almost every wrong VAT figure comes from one of five habits.

• Taking the rate off the gross. A 20 percent rate does not mean 20 percent of the gross price. 300 x 0.80 gives 240, and the correct net is 250.
• Rounding each line, then adding. Round the VAT per line only if the invoice shows it per line, and round once on the total otherwise. Three lines rounded up can leave the invoice a penny or two out of balance.
• Using one rate for a mixed basket. Standard, reduced and zero-rated items each carry their own rate, as the three line invoice above shows.
• Charging VAT on a cross-border B2B sale that is reverse charged. When the business customer accounts for the tax in their own country, the invoice shows no VAT and carries a note instead. Charging it anyway creates a refund to chase.
• Treating VAT, GST and sales tax as the same thing. The arithmetic for a single rate looks identical, but the reporting, the reclaim rules and the place of supply are not.

The error grows with the size of the invoice: on 300 the wrong method loses 10, which is 4 percent of the true net. On a 30,000 invoice the same mistake loses 1,000.

This page is an estimating tool, not tax advice. Rates, exemptions and place of supply rules change, and the treatment of a specific sale depends on facts a calculator cannot see. Confirm the rate with the tax authority in the country of supply before you file.