Learn the VAT formulas for adding VAT, removing VAT and finding the VAT amount.
VAT stands for Value Added Tax. It is added to many products and services and is normally shown as a percentage of the net price.
The VAT percentage varies between countries and may also depend on the type of product or service.
Before calculating VAT, identify:
To calculate a total price including VAT, multiply the net price by one plus the VAT percentage divided by 100.
Total price = Net price × (1 + VAT rate ÷ 100)
Net price: 100
VAT rate: 25%
Calculation:
100 × 1.25 = 125
The VAT amount is 25, and the total price including VAT is 125.
To calculate only the VAT amount from a net price, multiply the net price by the VAT percentage divided by 100.
VAT amount = Net price × (VAT rate ÷ 100)
100 × 0.25 = 25
The VAT amount is 25.
Add the VAT amount to the net price:
100 + 25 = 125
If a price already includes VAT, you should not simply subtract the VAT percentage from the total.
Instead, divide the total price by one plus the VAT percentage divided by 100.
Net price = Total price ÷ (1 + VAT rate ÷ 100)
Total price including VAT: 125
Calculation:
125 ÷ 1.25 = 100
The net price is 100.
The VAT amount is:
125 − 100 = 25
Removing 25% from a VAT-inclusive price is not the same as reversing a 25% VAT addition. Use the reverse VAT formula instead.
Standard and reduced VAT rates may apply to different products and services. Always confirm the correct rate for the relevant country.
The net price is the amount before VAT. The total price is the amount after VAT has been added.
| Net price | VAT rate | VAT amount | Total price |
|---|---|---|---|
| 100 | 20% | 20 | 120 |
| 100 | 21% | 21 | 121 |
| 100 | 25% | 25 | 125 |
| 250 | 20% | 50 | 300 |
Yes. The mathematical calculation is the same whether the amount is in euros, dollars, pounds, kroner or another currency.
Multiply the net price by 1.20.
Multiply the net price by 1.25.
Divide the VAT-inclusive total by 1.20.
Divide the VAT-inclusive total by 1.25.
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