VAT Calculator

What is VAT?

VAT (Value Added Tax) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The end consumer ultimately pays the VAT, while businesses collect and remit it to the government.

VAT is used in over 160 countries worldwide, including all EU member states, the United Kingdom, and many other nations. It's one of the most common forms of consumption taxation globally.

VAT Calculation Formulas

The formulas for calculating VAT are:

When adding VAT:

VAT Amount = Net Amount × (VAT Rate ÷ 100)

Gross Amount = Net Amount + VAT Amount

Gross Amount = Net Amount × (1 + VAT Rate ÷ 100)

When removing VAT:

Net Amount = Gross Amount ÷ (1 + VAT Rate ÷ 100)

VAT Amount = Gross Amount - Net Amount

Example Calculations

Adding VAT (20% UK rate):

• Net Amount: £100
• VAT Amount: £100 × 20% = £20
• Gross Amount: £100 + £20 = £120

Removing VAT (20% UK rate):

• Gross Amount: £120
• Net Amount: £120 ÷ 1.20 = £100
• VAT Amount: £120 - £100 = £20

VAT Rates by Country

• United Kingdom: 20% (standard), 5% (reduced), 0% (zero-rated)
• Germany: 19% (standard), 7% (reduced)
• France: 20% (standard), 10%, 5.5%, 2.1% (reduced rates)
• Spain: 21% (standard), 10%, 4% (reduced rates)
• Italy: 22% (standard), 10%, 5%, 4% (reduced rates)
• Netherlands: 21% (standard), 9% (reduced)
• Belgium: 21% (standard), 12%, 6% (reduced rates)
• Poland: 23% (standard), 8%, 5% (reduced rates)
• Sweden: 25% (standard), 12%, 6% (reduced rates)
• Norway: 25% (standard), 15%, 12% (reduced rates)
• Denmark: 25% (standard, no reduced rates)
• Ireland: 23% (standard), 13.5%, 9%, 4.8% (reduced rates)
• United Arab Emirates: 5% (standard)

Types of VAT Rates

• Standard Rate: Applied to most goods and services
• Reduced Rate: Applied to certain essential goods (food, books, newspapers)
• Zero Rate: Applied to exports, some food items, children's clothes
• Exempt: No VAT charged, but input VAT cannot be reclaimed (financial services, education)
• Out of Scope: Not subject to VAT at all (wages, donations)

For Business Owners

• Register for VAT when turnover exceeds threshold
• Charge correct VAT rate for your products/services
• Keep detailed VAT records for at least 6 years
• Submit VAT returns on time to avoid penalties
• Reclaim VAT on business purchases (input VAT)
• Issue VAT invoices with required information
• Consider flat rate VAT scheme for simplified accounting
• Understand Making Tax Digital (MTD) requirements
• Account for VAT on imports and exports correctly
• Review VAT registration if business changes significantly

For Consumers

• Retail prices usually include VAT in Europe
• Check if prices are VAT inclusive or exclusive
• Zero-rated items have 0% VAT (but are still VAT taxable)
• Children's clothes and most food are zero-rated in UK
• Some services are VAT exempt (insurance, healthcare)
• VAT refunds available for tourists in some countries
• Business purchases may allow VAT reclaim

VAT Registration

When do you need to register for VAT?

• UK: When turnover exceeds £85,000 in a 12-month period
• EU: Thresholds vary by country (€10,000 to €100,000+)
• You can register voluntarily even below the threshold
• Selling goods to EU from UK requires VAT registration
• Digital services have special VAT rules (MOSS scheme)
• Registration allows you to reclaim VAT on purchases

When to Use This Calculator

• Creating invoices and quotes for customers
• Pricing products and services correctly
• Calculating VAT due on purchases
• Preparing VAT returns and accounts
• Checking VAT calculations on receipts
• Budgeting and financial planning
• Comparing supplier prices (VAT inclusive vs exclusive)
• International trade calculations

VAT vs Sales Tax

VAT differs from sales tax (used in the USA):

• VAT: Collected at each stage of production/distribution
• Sales Tax: Collected only at final point of sale
• VAT: Businesses can reclaim input VAT
• Sales Tax: No mechanism for business reclaim
• VAT: More transparent for businesses
• VAT: Reduces tax evasion through paper trail