To add VAT, multiply the net price by 1 plus the rate as a decimal: 100 at 20% is 100 × 1.20 = 120. To remove VAT, divide the gross price by that same multiplier: 120 ÷ 1.20 = 100. The second one is where hand-done VAT falls apart, because the instinct is to take 20% off 120 and write down 96. That is wrong by four, and it stays wrong however many times you recheck it the same way.
Adding VAT to a net price
One multiplication. Turn the rate into a multiplier — 20% becomes 1.20, 19% becomes 1.19, 8.1% becomes 1.081 — and multiply. The result is the gross, which is what the customer pays.
For the invoice you also need the VAT on its own, which is the net times the rate: 100 × 0.20 = 20. Net, VAT, gross — those three figures are what a VAT invoice has to show, and they only ever have one relationship: net + VAT = gross.
Removing VAT from a price that already includes it
Divide by the multiplier. At 20%, gross ÷ 1.20. At 23%, gross ÷ 1.23. At 8.1%, gross ÷ 1.081.
Subtracting the rate does not work. The VAT was worked out as a percentage of the net price. Once it has been added on, that same amount of money is a smaller percentage of the bigger gross figure. When you take 20% of the gross, you are taking 20% of a number that already contains the tax — so you take out more than was ever put in.
How wrong is it, exactly?
Predictably wrong. The subtract-the-rate answer is too low by rate² ÷ (1 + rate) of the gross, with the rate as a decimal:
- 20% — you lose 3.3% of the gross. On a gross of 1,200 the net comes out 40 too low.
- 25% — 5% of the gross.
- 27%, Hungary's standard rate and the highest in the EU — 5.7%.
On round numbers: a gross of 100 at 20% is a net of 83.33 and VAT of 16.67. Subtracting 20% tells you 80 and 20. The VAT is overstated by 3.33, the margin you think you have is not the margin you have, and on a return you have declared tax you never collected.
If you would rather not run the division by hand, the VAT calculator here takes an amount, a rate and one choice — whether VAT is already inside the figure — and prints net, VAT and gross together. When the amount includes VAT, it also shows what the subtract-the-rate answer would have been and how far off it is.
How much of a gross price is VAT?
The portion of a gross price that is VAT is rate ÷ (100 + rate). At some rates that reduces to a fraction you can use without a calculator:
| Rate | VAT as a share of the gross | Shortcut |
|---|---|---|
| 5% | 1/21 | — |
| 10% | 1/11 | divide by eleven |
| 19% | 19/119 | a shade under a sixth |
| 20% | 1/6 | divide by six |
| 21% | 21/121 | — |
| 23% | 23/123 | — |
| 25% | 1/5 | divide by five |
The 20% and 25% rows are the ones worth memorising. A UK receipt for 120 at the standard rate has exactly 20 of VAT in it; divide by six and you are done. Most other rates do not simplify, so for those the division is the honest route. Either way the fraction is a quick sanity check: if the VAT on a 20%-rated invoice is well under a sixth of the total, something on it is wrong.
Which rate applies?
Standard rates across the EU run from 17% in Luxembourg to 27% in Hungary, over a floor of 15% that the VAT Directive stops members going below. Outside the EU it appears as GST in Australia, New Zealand, Singapore and Canada, IVA in Spanish-speaking countries and consumption tax in Japan, with identical arithmetic underneath.
Standard rates are only half the story. Almost every country applies reduced rates to some mix of food, books, medicines, children's clothing, transport and domestic energy, often less than half the standard rate. What you are selling decides the rate as much as where you are. No calculator can pick it for you, this one included; it does the arithmetic once you have the number.
Rates also move, sometimes mid-year: Switzerland went to 8.1% in January 2024 and Finland to 25.5% that September. Any rate you remember from a couple of years ago is worth checking against your tax authority before it goes on an invoice.
Zero-rated is not the same as exempt
Both mean the customer pays nothing, which is why they get muddled, and they are very different for the seller. A zero-rated supply is taxable at 0%, so the business stays inside the VAT system and can reclaim the VAT it paid on its own costs. An exempt supply sits outside the system, so that input VAT becomes a real cost. Same invoice total, different money in the account at the end of the quarter.
Do you apply a discount before or after VAT?
It makes no difference, because multiplication does not care about order. A net price of 100 with 10% off and 20% VAT is 100 × 0.90 × 1.20 = 108, and 100 × 1.20 × 0.90 is also 108.
What matters is being clear about which figure you are discounting: a "10% off" sign in a shop takes it off a gross price, while a 10% trade discount on an invoice usually comes off the net. Stacked discounts mislead people the same way — two successive 20% reductions are not 40% off. Working out a discount in your head covers that arithmetic, and it is this mistake in a different costume.
Rounding, and the cent that goes missing
VAT is charged to 2 decimal places, so something has to be rounded, and once you round more than one of the three figures independently they can stop adding up. Net 83.33 plus VAT 16.67 gives 100.00 — fine. Nudge the numbers and you land a cent away from the gross you started with.
That gap is not an error; mixing methods is. Rounding the VAT per line and summing the lines gives a different total from summing the net values first and taking VAT on the total. Both are defensible, but a purchase-order system that reconciles totals will reject an invoice that used one method in one place and the other elsewhere. Pick one and keep it. Some tax authorities also allow VAT to be rounded down to the nearest 1 cent rather than rounded normally, so check what yours expects first.
What is never defensible is storing money as a floating point number. Accounting systems hold amounts as whole cents in integers because 0.1 + 0.2 does not give 0.3 in binary floating point, and that drift lands at exactly the scale VAT cares about.
VAT is not US sales tax
Two different mechanisms that both end up on a receipt. VAT is charged at every stage of production, each business reclaiming what it paid on its inputs. Sales tax is charged once, at retail, to the end consumer only.
For calculation, the difference that bites is that the "remove the tax" direction barely exists in the US. European pricing is VAT-inclusive — the shelf price is the price — while sales tax is added at the till, so there is nothing inside the advertised figure to strip out. Rates also vary by state, county and sometimes city, which is the wrong shape of problem for a single-rate calculator.
If the percentage arithmetic is what keeps going wrong rather than the VAT rules, the four percentage questions and how to tell them apart is the better starting point, and the percentage calculator answers "what percent of the total is this" directly — the question hiding inside most VAT checks.
When the rate is not yours to choose
Cross-border sales are where arithmetic stops being the hard part. Selling B2B to a VAT-registered business in another EU country, you often charge nothing and the customer accounts for the tax under the reverse charge. Selling B2C across EU borders, past the EU-wide 10,000-euro threshold for distance sales and digital services you charge the customer's country rate rather than your own and report it through the One Stop Shop.
No calculator resolves that. Work out which rate applies and to whom; the multiplication is the five-second part at the end.
The VAT calculator does both directions with one toggle, carries presets for the common standard rates, and shows the working underneath so you can see whether the number came out of a multiplication or a division. It runs entirely in the browser, which is the only sensible arrangement for figures headed onto an invoice.
If the thing that caught you out here is how percentages behave when they are applied to a number that already includes them, how compound interest actually works is the same trap at a larger scale — growth that compounds cannot be undone by subtracting the percentage you added either.
Frequently asked questions
How do I calculate VAT on a price?
To add VAT, multiply the net price by 1 plus the rate as a decimal — at 20% that is × 1.20, giving 120 from 100. The VAT amount on its own is the net price times the rate, so 100 × 0.20 = 20. Net plus VAT always equals the gross.
How do I find the price before VAT?
Divide the gross price by 1 plus the rate as a decimal. A gross of 120 at 20% VAT divides by 1.20 to give a net of 100. Subtracting 20% from 120 gives 96, which is wrong, because the VAT was a percentage of the smaller net figure rather than of the gross.
What is the VAT fraction for 20%?
One sixth. The VAT inside a gross price is always rate ÷ (100 + rate), which at 20% is 20/120 and reduces to 1/6. At 25% it is one fifth and at 10% it is one eleventh. Most other rates do not simplify, so 23% stays 23/123.
Do I apply a discount before or after VAT?
Either — the total is the same, because multiplying by 0.90 and by 1.20 gives 1.08 in either order. What matters is being clear about whether the discount comes off the net price or the gross, since a shop sign takes it off the gross and a trade discount on an invoice usually takes it off the net.
Is VAT the same as sales tax?
No. VAT is charged at each stage of production with businesses reclaiming the tax on their inputs, while US sales tax is charged once at retail to the final consumer. VAT is normally built into the advertised price and sales tax is added at the till, which is why removing VAT from a price is a common calculation and removing sales tax rarely is.
Last updated September 19, 2026