VAT calculator: add or remove VAT

A supplier quotes a price excluding tax, the shop down the road advertises the same goods tax included, and the bookkeeping wants both. This page moves an amount from one side to the other: you type a sum, you say whether it is net or gross, you pick a rate, and three boxes show the amount excluding VAT, the tax itself and the matching gross total.

The arithmetic is a multiplication in one direction and a division in the other, run again on every keystroke, with no submit button and nothing sent to a server. The boxes carry a pound sign, but nothing in the calculation depends on the currency: the same numbers hold for pounds, dollars or rupees.

The rate list is a set of presets, not a rule. The page applies whatever rate it is given and knows nothing about the transaction behind it: which rate a sale falls under, and whether it is taxable at all, is decided by the tax law of the country concerned. What comes out is arithmetic you can check, not tax advice.

How to use it

1. Enter the amountThe Amount field takes decimals in steps of 0.01 and opens on 100. A comma typed as a decimal separator is converted to a point before the calculation rather than rejected.
2. Say whether the sum is net or grossThe selector under the amount decides the operation: from a net figure the page multiplies by the coefficient, from a gross figure it divides by that same coefficient. Getting this one setting wrong is the commonest source of a wrong answer.
3. Pick a rateThe list opens on the UK standard rate of 20 percent, followed by the reduced rate of 5 percent and the zero rate. Below them come the French rates (20, 10, 5.5 and 2.1 percent), 21 percent for Belgium, 8.1 percent for Switzerland, 15 percent for Mauritius, and an "Other rate…" entry at the end of the list.
4. Open the free field when your rate is missingChoosing "Other rate…" reveals a "Custom rate (%)" field, pre-filled with 8.5.
5. Read the three resultsThe net amount, the tax and the gross total appear to two decimals and are recomputed as you type. There is no calculate button to press.

Two directions, and the trap of taking 20 percent back off

The conversion coefficient is 1 + rate/100: 1.20 for 20 percent, 1.10 for 10 percent, 1.055 for 5.5 percent, 1.021 for 2.1 percent. Going up, gross = net × coefficient. Coming back down, net = gross ÷ coefficient. The tax itself is always the difference between the two figures, never a percentage of the gross.

A contractor invoices 1,000 at a standard rate of 20 percent: 1,000 × 1.20 = 1,200 gross, of which 200 is tax. Feed those 1,200 back the other way and 1,200 ÷ 1.20 returns 1,000 net. Taking 20 percent off 1,200 would give 960, a gap of 40 and a tax figure of 240 instead of 200. The error is in the base: the rate is charged on the net amount, not on the total collected.

Measured against the gross price, the tax is therefore not 20 percent but 20/120, one sixth of the ticket price, or 16.67 percent. At 10 percent the share falls to 9.09 percent, at 5.5 percent to 5.21 percent, at 2.1 percent to 2.06 percent. A tax-free day at a 20 percent rate is worth 16.67 percent off, not 20.

Which rate applies, and who decides it

The drop-down carries presets, and they are a shortcut rather than a rule: the page never checks that the rate matches what is being sold. Most systems have a standard rate that applies by default, with reduced rates carved out by statute for named categories: food, books, passenger transport, accommodation, medicines, certain renovation work.

• United Kingdom: a standard rate of 20 percent since 4 January 2011, a reduced rate of 5 percent, and a zero rate on categories such as most food and children's clothing.
• Germany: 19 percent standard, 7 percent reduced.
• France: 20 percent standard, with reduced rates of 10, 5.5 and 2.1 percent.
• Ireland: 23 percent standard.
• Australia: a single goods and services tax of 10 percent.
• United States: no VAT at all. Sales tax is set by states and by local jurisdictions, and it is added at the till rather than built into the shelf price.

That last line matters when comparing prices across borders. In a VAT system consumer prices are normally advertised tax included, so the label carries the gross figure; in a sales tax system the advertised price is usually the net one. This page handles both, provided you tell it which of the two you are holding.

Rates that are not in the list

The custom field exists because no fixed list survives contact with reality. It opens on 8.5, the standard rate in Guadeloupe, Martinique and Réunion, the French overseas départements where mainland rates do not apply and where the reduced rate is 2.1 percent. It sits in the free field precisely because it is not a mainland rate.

Several countries run rates the list does not carry. Switzerland, present at 8.1 percent, also has a reduced rate of 2.6 percent and an accommodation rate of 3.8 percent. Canada layers a federal tax of 5 percent on top of provincial ones. In the United States a combined state and local rate can differ between two neighbouring cities.

Historic rates are just as valid an input: re-checking an old invoice means using the rate in force on the day it was issued, not today's. The United Kingdom charged 17.5 percent before January 2011, with a temporary drop to 15 percent between December 2008 and the end of 2009.

When there is no VAT to calculate

Not every invoice carries tax. Most systems exempt small businesses below a turnover threshold: under it, no tax is charged on sales and none is reclaimed on purchases, and the invoice carries a statement to that effect instead of a tax line. Those thresholds are revised regularly, so check the current value with the tax authority that applies to you.

There is also a distinction the arithmetic cannot show. A zero-rated supply is taxable at 0 percent, which normally still lets the seller recover the tax paid on inputs. An exempt supply sits outside the tax, and that input tax generally stays with the seller. Both show a tax amount of zero here, with entirely different consequences in the accounts.

Cross-border sales between registered businesses often shift the liability to the buyer under a reverse charge, so the invoice shows no tax while the buyer accounts for it. Place-of-supply rules decide whose rate applies.

This page performs an arithmetic conversion. It does not determine the rate your transaction falls under and is not a substitute for professional tax advice.