To calculate VAT, simply enter the gross amount, and choose the calculation type, such as Add VAT or Exclude VAT. Enter the VAT rate and click the Calculate button.
Online VAT Calculator
VAT Overview
VAT is a tax that is levied on the sale of goods or services. It is an integral part of the GDP of any country and comes under the Indirect tax.
VAT is a multi-stage tax that is imposed on sales and purchases at each stage of production of goods or services. If the annual turnover of a business exceeds a certain (UK- £85,000) threshold, VAT must be paid on the supply of goods or services.
Note: To receive the latest VAT updates, you can subscribe to HM Revenue & Customs (HMRC). Read more here about how you can receive VAT updates by email from GOV.UK.
VAT Calculation Formula
Follow the steps given below to calculate Value Added Tax (VAT) or Reverse VAT on the price of a product or service:
VAT Amount = Total Amount – Net Amount
Add VAT = Total Amount = Net Amount + (Net Amount × VAT Rate)
Remove VAT = Net Amount = Total Amount ÷ (1 + VAT Rate)
Total Amount = Net Amount + VAT Amount
Where:
- VAT Amount: The amount of VAT that is added to the selling price (for regular VAT calculations) or subtracted from the selling price (for Reverse VAT).
- Selling Price: The price of a product or service before VAT is applied.
- VAT Rate: The percentage rate at which VAT is charged. Make sure the VAT rate for calculation is in decimal form.
To use this formula for regular VAT calculations, you need to multiply the sales price by the VAT rate divided by 100.
Example for VAT Calculation
Assume a product or service costs £50,000 and the VAT rate is 20%.
1: VAT Amount: £50,000 × (20 / 100) = £10,000
2: Add VAT: £50,000 + VAT Amount = £50,000 + £10,000 = £60,000
3: Remove VAT: Amount – (Amount × (1 / (1 + VAT rate / 100)))
VAT amount: £50,000 – (£50,000 × (1 / 1.20)) = £8333.33
Amount without VAT = (£50,000 × 0.833333) = £41,666.67
How many countries use VAT?
More than 170 countries in the world impose value-added tax (VAT). VAT rates differ in different countries; Read more about countries that charge VAT on goods and services.
Useful Links
| UK Reverse VAT Calculator | Check Here |
| VAT Calculator by Country | Check Here |
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Frequently Asked Questions
The amount you input is the net price of the product or service. When you select Add VAT, the VAT rate is applied to the net price.
Calculation Formula: Gross Price = Net Price + ( Net price × VAT rate)
The amount you input is the price of the products or services. So, when you select Remove VAT, the VAT amount is excluded from the price. This is a reverse VAT calculation and the formula is – Remove VAT Calculation: Net Price = Gross Price / (1 + VAT Rate)
VAT is paid by consumers when purchasing goods or services. However, businesses are responsible for collecting and remitting taxes to the government.
Input tax is the VAT paid by a business on purchases, while output tax is the VAT collected on sales. Businesses deduct input tax from output tax and remit the difference to the tax authority.
This means that VAT will be added to the price at the time of billing. In other words, the displayed price does not include VAT.
When a product or service is mentioned as “including VAT”, it means that the price already includes VAT. In other words, the price you see is the final price you will pay at the time of purchase.
In some countries, you are eligible to claim a VAT refund for certain purchases. If you are charged VAT on goods or services that are eligible for a refund in some countries. Eligibility criteria vary and many EU countries allow VAT refunds to non-EU residents for purchases during their travels. Popular tourist destinations that offer VAT refunds are France, Italy, Germany and Spain.