VAT Calculator

FAQ

How do I calculate VAT on a price?

Multiply the net (VAT-exclusive) price by the VAT rate as a decimal. For 20% VAT on $100: VAT = $100 x 0.20 = $20, so the gross price is $120. Our calculator does this instantly for any rate.

What is the formula to add VAT to a net price?

Gross Price = Net Price x (1 + VAT Rate / 100). For example, net $200 at 20% VAT: $200 x 1.20 = $240. The VAT amount is $40.

What is the formula to remove VAT from a gross price?

Net Price = Gross Price / (1 + VAT Rate / 100). For example, gross $240 at 20% VAT: $240 / 1.20 = $200. The VAT portion is $40. This is sometimes called calculating VAT "backwards".

What is the difference between net and gross price?

The net price is the amount before VAT is added (what the seller receives after remitting tax). The gross price is the total amount including VAT (what the buyer pays). On invoices, both amounts are usually shown along with the VAT amount.

What does VAT inclusive vs. VAT exclusive mean?

VAT inclusive (gross) means the price already contains VAT — common in retail and B2C sales. VAT exclusive (net) means VAT will be added on top — common in B2B invoicing. Always check which convention applies before quoting or comparing prices.

Why does removing 20% VAT not equal subtracting 20%?

Because VAT is calculated on the net price, not the gross price. If an item costs $120 including 20% VAT, the net price is $120 / 1.20 = $100, and the VAT is $20 (which is 16.67% of $120, not 20%). Simply subtracting 20% from $120 would give $96, which is incorrect.

What is the UK VAT rate in 2026?

The UK standard VAT rate is 20%. The reduced rate is 5% (home energy, child car seats) and 0% applies to most food, children's clothing, books, and public transport. The VAT registration threshold is GBP 90,000 (raised in April 2024).

What are the EU VAT rates in 2026?

EU standard rates range from 16% (Luxembourg) to 27% (Hungary). Common rates: Germany 19%, France 20%, Spain 21%, Italy 22%, Netherlands 21%, Poland 23%. Most countries also have one or two reduced rates for essentials.

What are zero-rated items?

Zero-rated goods and services have a 0% VAT rate — the seller charges no VAT but can still reclaim input VAT. Common zero-rated items include basic food, children's clothing, books, and exports. This differs from VAT-exempt items, where no VAT is charged and input VAT cannot be reclaimed.

How do I show VAT on an invoice?

A VAT invoice must include: your VAT registration number, the date, the net amount, the VAT rate, the VAT amount, and the gross total. For multiple VAT rates, each rate must be shown separately with its own subtotal. Keep records for at least 6 years.

What is the VAT Flat Rate Scheme?

The UK Flat Rate Scheme lets small businesses (turnover under GBP 150,000) pay a fixed percentage of gross turnover as VAT instead of tracking input/output VAT. The percentage varies by industry (e.g., 14.5% for computer services). It simplifies bookkeeping but may not suit businesses with high input VAT.

How do I calculate VAT in Excel?

To add VAT: =A1*(1+VAT_RATE). To remove VAT: =A1/(1+VAT_RATE). To extract the VAT amount: =A1-A1/(1+VAT_RATE). Replace VAT_RATE with the decimal rate (e.g., 0.20 for 20%). For bulk invoices, our calculator supports multiple items at once.

What is the VAT registration threshold?

In the UK, you must register for VAT when taxable turnover exceeds GBP 90,000 in a rolling 12-month period. In the EU, thresholds vary by country (e.g., Germany EUR 25,000 from 2025, France EUR 91,900 for goods). You can also register voluntarily to reclaim input VAT.

What is the VAT margin scheme?

The margin scheme charges VAT only on the profit margin (selling price minus purchase price), not the full selling price. It applies to second-hand goods, antiques, art, and used vehicles. For example, buy a used car for $8,000, sell for $10,000 — VAT applies only to the $2,000 margin.

What is the reverse charge mechanism?

Under reverse charge, the buyer accounts for VAT instead of the seller. This applies to cross-border B2B services within the EU and certain domestic supplies (e.g., construction services in the UK). The buyer self-assesses VAT on the purchase and can usually reclaim it simultaneously.

How do I get a VAT refund?

Businesses reclaim input VAT through regular VAT returns. Tourists visiting the EU or UK can claim refunds on goods purchased and taken home using VAT refund schemes (e.g., via a VAT 407 form in the UK). Refund companies like Global Blue charge a processing fee of 20-40% of the VAT.

How is VAT applied to services?

VAT on services follows the place-of-supply rules. For B2B services, VAT is usually due where the customer is based. For B2C services, VAT is usually due where the supplier is based (with exceptions for digital services, which use the customer's location). Check the specific rules for your service type.

How do EU VAT rates compare?

The EU minimum standard rate is 15%. In 2026, rates range from 16% (Luxembourg) to 27% (Hungary). Western Europe averages 20-22%, Scandinavia 24-25%, Eastern Europe 19-27%. Most countries have 1-2 reduced rates (5-13%) for food, books, medicine, and public transport.

What is a VAT invoice and when is it required?

A VAT invoice is a legal document that includes VAT details (rate, amount, registration number). It is required for all B2B sales where the buyer needs to reclaim input VAT. Simplified invoices (with fewer details) are allowed for amounts under GBP 250 in the UK or EUR 400 in many EU countries.

How is VAT different from sales tax?

VAT is collected at every stage of the supply chain (with each business deducting input VAT), while sales tax is collected only at the final point of sale. VAT is used in 170+ countries including all of Europe. Sales tax is used primarily in the US and a few other countries. Both increase the price consumers pay.

When do I need to charge VAT?

You must charge VAT once you are VAT-registered (mandatory above the threshold, optional below). VAT applies to most goods and services you sell within your country. Exports are usually zero-rated. Exempt supplies (e.g., financial services, education, healthcare) do not require VAT to be charged.

How does VAT work for online businesses?

Online sellers of goods and digital services must charge VAT based on the customer's country under the EU One-Stop Shop (OSS) scheme for cross-border B2C sales. The EUR 10,000 annual threshold applies — below it, you may use your home country's rate. Register for OSS in one EU country to simplify reporting across all 27 member states.