VAT Calculator
With amount 120 usd, vat rate 20 percent, vat comes to $20.00 — vat. It is reached in 4 steps, the last of which is 100 * 0.2, and each one is printed on the page with its numbers filled in. The formula is the one published by HMRC, not an approximation fitted to it.
Value added tax added to a net price or stripped out of a gross one, with the divisor that makes the second case work and the rate for every EU and UK band.
Formula and sources checked · How we check
Amount 120, The amount is Gross — VAT already included, VAT rate 20
$20.00
VAT for the example below. Editing a field recomputes the calculator below; this figure holds the answer the page was loaded with.
It is written into the HTML rather than drawn by a script, so a search engine reading this page without running JavaScript still finds an answer.
- Net, before VAT
120 / (1 + 0.2)$100- VAT
100 * 0.2$20- Gross, including VAT
100 + 20$120- VAT as a share of the gross
20 / 120 * 10016.667
Worked example
A £120 gross price at 20% contains £20 of VAT, not £24. The net is 120 ÷ 1.20 = £100 and the tax is £20 — a sixth of the gross, because the rate is charged on the net. Taking 20% off £120 gives £96 and loses £4 of it.
How to work it out yourself
- 1.Decide which figure you have. A price on a shelf in the UK or EU is gross; a price on a trade invoice is usually net. Getting this backwards is the whole of the error.
- 2.To remove VAT, divide rather than subtract. At 20% the divisor is 1.20 and the VAT is a sixth of the gross; at 19% it is 1.19 and roughly a sixth again; at 5% the divisor is 1.05 and the VAT is a twenty-first.
- 3.Use the rate for where the sale happens, not where the seller is. Distance selling within the EU is taxed at the customer’s rate above the threshold, which is why one product can carry six rates.
VAT in a gross price, by rate
| VAT rate (percent) | VAT | Net, before VAT | VAT |
|---|---|---|---|
| 5 | $5.71 | $114 | $6 |
| 7.7 | $8.58 | $111 | $9 |
| 19 | $19.16 | $101 | $19 |
| 20 | $20.00 | $100 | $20 |
| 21 | $20.83 | $99 | $21 |
| 25 | $24.00 | $96 | $24 |
The formula
- Net, before VAT
120 / (1 + 0.2) - VAT
100 * 0.2 - Gross, including VAT
100 + 20 - VAT as a share of the gross
20 / 120 * 100
Source: HMRC — VAT rates on different goods and services, European Commission — VAT rates applied in the member states
Questions people actually ask
- How do I work out the VAT in a price that already includes it?
- Divide by 1 plus the rate, then subtract. At 20% a £120 price is £120 ÷ 1.20 = £100 net and £20 of VAT. The shortcut for 20% is to divide the gross by six. Subtracting 20% from the gross is the common mistake and it understates the net.
- Why is VAT a sixth of the gross at a 20% rate?
- Because the 20% is charged on the net, not on the total. If the net is 100 the VAT is 20 and the gross is 120, so the tax is 20/120 — one sixth, or 16.67% of what the customer pays.
- Is VAT the same as sales tax?
- No. Sales tax is charged once, at the final sale, and is added at the till. VAT is charged at every stage and reclaimed by each business in the chain, so only the end consumer bears it — and in most countries the shelf price already contains it.
- What VAT rate should I use?
- The standard rate where the sale is taxed: 20% in the UK and France, 19% in Germany, 21% in the Netherlands and Spain, 23% in Ireland and Poland, 25% in Sweden and Denmark. Food, books, children’s clothing and energy often sit in a reduced band or at zero, and the bands differ by country.
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