VAT Calculator

Calculate VAT amounts, net prices, and gross prices with our free online calculator. Easily determine VAT inclusive and exclusive prices for your business transactions.

Understanding Value Added Tax (VAT)

Value Added Tax (VAT) is a consumption tax placed on products and services whenever value is added at each stage of the supply chain, from production to the point of sale. VAT is collected by businesses on behalf of the government and is ultimately paid by the end consumer.

How is VAT calculated?

There are two main ways to calculate VAT:

Adding VAT to a net amount: Multiply the net amount by the VAT rate percentage. For example, with a 20% VAT rate on a $100 item: $100 × 0.20 = $20 VAT, making the gross price $120.
Extracting VAT from a gross amount: Divide the gross amount by (1 + VAT rate as a decimal). For example, to find the net amount of a $120 item with 20% VAT: $120 ÷ 1.20 = $100 net amount, with $20 VAT.

VAT-inclusive vs. VAT-exclusive prices

Understanding the difference between VAT-inclusive and VAT-exclusive prices is important:

VAT-exclusive (net) price: The price before VAT is added. This is often used in business-to-business transactions.
VAT-inclusive (gross) price: The final price including VAT. This is the price typically shown to consumers in retail settings.

Businesses need to be clear about whether quoted prices include or exclude VAT to avoid confusion and ensure compliance with local regulations.

VAT rates around the world

VAT rates vary significantly by country and sometimes by product or service category:

European Union countries typically have standard rates between 17% and 27%
Many countries have reduced rates for essential items like food and medicine
Some products or services may be exempt from VAT or zero-rated
The global average standard VAT rate is approximately 15-20%

Always check the current VAT rates applicable in your specific location and for your particular business activities.

VAT for businesses

For businesses, understanding VAT is crucial:

VAT registration: Most countries require businesses to register for VAT once their turnover exceeds a certain threshold
Input and output VAT: Businesses collect VAT on sales (output tax) and pay VAT on purchases (input tax), remitting the difference to tax authorities
Record-keeping: Proper documentation of VAT on purchases and sales is essential for compliance and accurate reporting

Our VAT calculator helps businesses quickly determine the correct VAT amounts for invoicing, pricing, and financial planning.

Common VAT calculation scenarios

Retail pricing: Determining the final price to charge customers when adding VAT to your base price
Invoice verification: Checking if the VAT amount on received invoices is correct
Financial planning: Estimating VAT liabilities for budgeting and cash flow management
Reverse calculations: Working backward from a gross amount to determine the original net price and VAT component

Use our calculator for any of these scenarios to ensure accurate VAT calculations every time.