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About This Calculator
Value Added Tax is a consumption tax applied at each stage of production and distribution in most countries outside the United States. This calculator adds VAT to a net price or extracts the VAT amount from a gross price at any specified rate. It's essential for businesses handling invoicing, pricing, and tax compliance in VAT-regulated markets across Europe, Asia, and beyond.
Quick Tips
- 1 VAT is applied on top of the price, not included like sales tax.
- 2 Businesses can reclaim VAT paid on eligible expenses as input tax credits.
- 3 VAT rates differ by country and sometimes by product category within a country.
Example Calculation
A UK business sells a product for 850 GBP net with 20% standard VAT.
VAT amount: 170 GBP | Gross price (incl. VAT): 1,020 GBP
What is VAT?
Value Added Tax (VAT) is a consumption tax placed on products and services at each stage of production or distribution where value is added. Unlike sales tax, VAT is collected at every step of the supply chain. Over 160 countries worldwide use VAT, with rates ranging from 5% to 27%.
How VAT is Calculated
To calculate VAT: VAT amount = net price × (VAT rate / 100). The gross price (VAT-inclusive) = net price + VAT amount. To extract VAT from a gross price: VAT amount = gross price - (gross price / (1 + VAT rate / 100)). This calculator handles both directions.
VAT Rates Around the World
Common VAT rates include: UK 20%, Germany 19%, France 20%, Australia 10% (GST), Canada 5% (GST), Japan 10%, India 18% (GST), Brazil varies by state. The US does not have a federal VAT but has state-level sales taxes ranging from 0% to 7.25%.
VAT for Businesses
Businesses registered for VAT collect tax on sales (output VAT) and can reclaim VAT paid on business purchases (input VAT). The difference is paid to or refunded by the government. Proper VAT accounting is essential for compliance and can significantly impact cash flow management.
Frequently Asked Questions
VAT is collected at every stage of production and distribution, while sales tax is only collected at the final point of sale to the consumer. VAT allows businesses to deduct tax paid on inputs, while sales tax does not. Both ultimately tax the final consumer.
To find the VAT included in a gross price, divide the gross amount by (1 + VAT rate). For example, with 20% VAT: net = gross / 1.20, and VAT = gross - net. For a gross price of $120: net = $100, VAT = $20.
Yes, Goods and Services Tax (GST) is functionally identical to VAT. Simply enter the GST rate as the VAT rate. This calculator works for any percentage-based consumption tax applied to a net amount.
VAT exemptions vary by country but commonly include essential food items, medical supplies, educational services, financial services, and children's clothing. Some countries apply reduced VAT rates to these categories instead of full exemption.