VAT Calculator

How to calculate VAT

Adding VAT

To add VAT to a net amount, multiply the net amount by the VAT rate and add the result to the original amount.

$1,000 × 20% = $200 VAT

$1,000 + $200 = $1,200 including VAT

Removing VAT

Removing VAT requires dividing rather than subtracting the VAT percentage.

For a $1,200 total that includes 20% VAT:

$1,200 ÷ 1.20 = $1,000 before VAT

$1,200 − $1,000 = $200 VAT

VAT formulas

Adding VAT

VAT amount = Net amount × VAT rate

Gross amount = Net amount + VAT

Removing VAT

Net amount = Gross amount ÷ (1 + VAT rate)

VAT amount = Gross amount − Net amount

VAT inclusive vs. VAT exclusive

VAT exclusive means the stated amount does not yet include VAT. VAT inclusive means VAT is already included in the stated amount.

$100 excluding 20% VAT becomes $120 including VAT.

Why isn't removing 20% VAT the same as subtracting 20%?

A $100 net price with 20% VAT becomes $120. Subtracting 20% of $120 gives $96, not $100.

Instead: $120 ÷ 1.20 = $100.

Calculating VAT on an invoice

An invoice can show the amount before VAT, the VAT rate, the VAT amount, and the total including VAT. In the Invoice Generator, tax is a document-level percentage applied after discounts. Enter the rate yourself—the generator does not choose which VAT rate to charge.

Check a full invoice total in the Invoice Calculator, or see Creating Invoices for a walkthrough.

VAT rates vary

VAT rates and requirements vary by country, transaction, product, and customer. This calculator performs the calculation using the rate you enter; it does not determine which VAT rate applies.

Frequently asked questions

How do I calculate VAT?

Multiply the net amount by the VAT rate. For $100 at 20%, VAT is $20 and the total including VAT is $120.

How do I remove VAT from a total?

Divide the VAT-inclusive total by 1 plus the VAT rate. For $1,200 that includes 20% VAT, $1,200 ÷ 1.20 = $1,000 before VAT, so VAT is $200.

How do I calculate 20% VAT?

$100 × 20% = $20 VAT, giving a $120 total including VAT. To take 20% VAT out of a $120 total, divide by 1.20 to get $100.

Why can't I subtract 20% to remove 20% VAT?

A $100 net price with 20% VAT becomes $120. Subtracting 20% of $120 gives $96, not $100. Divide by 1.20 instead: $120 ÷ 1.20 = $100.

What does VAT inclusive mean?

VAT inclusive means the displayed amount already contains VAT. VAT exclusive means VAT still needs to be added.

What VAT rate should I use?

Rates vary by country, product, customer, and transaction. Enter the rate that applies to your situation. This calculator does not choose a rate for you.