What is the VAT formula?

There are two core formulas. To add VAT: Gross = Net × (1 + Rate ÷ 100). To remove VAT: Net = Gross ÷ (1 + Rate ÷ 100). Both use the VAT rate as a percentage, not a fraction subtracted directly.

How do I calculate VAT from a net price?

Multiply the net price by the VAT rate and divide by 100: VAT = Net × Rate ÷ 100. Add that VAT amount to the net price to get the gross price.

How do I calculate VAT from a gross price?

Use the reverse VAT formula: VAT = Gross × Rate ÷ (100 + Rate). This gives you the VAT portion contained inside a VAT-inclusive price without needing the net price first.

How do I add 20% VAT?

Multiply the net price by 1.20, or work it in two steps: VAT = Net × 20 ÷ 100, then Gross = Net + VAT. For example, £100 × 1.20 = £120.

How do I remove 20% VAT?

Divide the gross price by 1.20, not by subtracting 20%. For example, £120 ÷ 1.20 = £100 net, meaning the VAT amount was £20.

What is the reverse VAT formula?

The reverse VAT formula extracts the VAT amount directly from a VAT-inclusive price: VAT = Gross × Rate ÷ (100 + Rate). For 20% VAT, that's Gross × 20 ÷ 120.

How do I calculate VAT included in a price?

If a price already includes VAT, apply the reverse formula: VAT = Gross × Rate ÷ (100 + Rate). The net price is then Gross minus that VAT amount.

Is removing VAT the same as subtracting the VAT percentage?

No. Subtracting the VAT percentage directly from the gross price gives an incorrect, too-low result, because the VAT rate was originally applied to the smaller net price, not the gross price. Always divide by (1 + Rate ÷ 100) instead.

How do I calculate VAT on an invoice?

List the net price of each line item, apply VAT = Net × Rate ÷ 100 to get the VAT amount, then sum the net totals and VAT totals separately before adding them together for the invoice total.

What is the difference between net and gross price?

Net price is the amount before VAT is applied. Gross price is the final amount including VAT. The difference between the two figures is the VAT amount.

Can I use the VAT formula for any VAT rate?

Yes. The formulas work for any percentage rate — simply substitute the applicable rate. The mathematics does not change; only the rate value does.

Do VAT rates differ between countries?

Yes. Standard VAT rates vary by country, and many countries also apply reduced or zero rates to specific goods and services. The calculation formula itself stays the same everywhere.

How accurate are VAT calculator results?

The formulas are applied exactly, so results are mathematically precise for the amount and rate entered. Accuracy for your situation depends on using the correct rate and category for your country and item.

VAT Formula: How to Calculate VAT | VATCalculatorX

VAT Formula: How to Calculate VAT Step by Step

Learn the exact formulas for adding VAT, removing VAT, calculating VAT from a net or gross price, and working backwards from a VAT-inclusive amount. Use the examples and interactive calculator below to understand exactly how VAT calculations work.

Net Amount

VAT Rate

Currency

Enter a zero or positive amount and rate — VAT calculations don’t work with negative values.

Results update instantly and are for guidance only — confirm figures against official tax authority rates for compliance or filing.

VAT Formula at a Glance

The three formulas below cover every common VAT calculation. Copy any of them for reference.

Add VAT

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

Or: Gross = Net × (1 + Rate ÷ 100)

£100 at 20% → £20 VAT → £120 gross

Remove VAT

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

£120 at 20% → £100 net → £20 VAT

VAT from a Gross Price

VAT Amount = Gross Price × VAT Rate ÷ (100 + VAT Rate)

£120 at 20% → £120 × 20 ÷ 120 = £20 VAT

Important

Never remove VAT by simply subtracting the VAT percentage from the gross price (e.g. £120 − 20% ≠ £100). The VAT rate was applied to the smaller net price, not the gross price, so a direct subtraction always under-calculates the net amount. Use the division formula above instead.

What Do Net, VAT and Gross Mean?

Every VAT calculation moves between three figures. Understanding what each one represents makes the formulas easier to apply correctly.

Net Price

£100

Price before VAT

VAT

£20

Tax on the net amount

Gross Price

£120

Final price including VAT

Net price — the amount before VAT is applied.
VAT amount — the tax component, calculated as a percentage of the net price.
Gross price — the final amount a customer pays, including VAT.

How to Add VAT to a Price

VAT = Net Price × VAT Rate ÷ 100
Gross = Net Price + VAT
Shortcut: Gross = Net × (1 + VAT Rate ÷ 100)

Example using 20% VAT, net price £100:

Step 1: £100 × 20 ÷ 100 = £20 VAT
Step 2: £100 + £20 = £120

Net = £100 · VAT = £20 · Gross = £120

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Net amount

VAT rate

How to Remove VAT from a VAT-Inclusive Price

Net Price = Gross Price ÷ (1 + VAT Rate ÷ 100)
VAT = Gross Price − Net Price

Example using 20% VAT, gross price £120:

£120 ÷ 1.20 = £100 net
£120 − £100 = £20 VAT

Gross = £120 · Net = £100 · VAT = £20

Common Mistake

Do not simply subtract 20% from £120 (that gives £96, which is wrong). VAT is calculated as a percentage of the net price, not the gross price — so removing it requires division by (1 + Rate ÷ 100), not a straight percentage subtraction.

Try This Calculation

Gross amount

VAT rate

Reverse VAT Formula

Use this when you only know the VAT-inclusive (gross) price and need the VAT portion directly, without calculating the net price first.

VAT Amount = Gross Price × VAT Rate ÷ (100 + VAT Rate)
For 20% VAT: VAT = Gross × 20 ÷ 120

Example: £120 × 20 ÷ 120 = £20 VAT
Net = £120 − £20 = £100

This formula is useful for:

VAT invoices
Business expenses
Retail receipts
VAT-inclusive prices
Accounting checks
Purchase records

VAT Formula Table

Calculation	Formula
Add VAT	VAT = Net × Rate ÷ 100
Gross Price	Gross = Net + VAT
VAT-Inclusive Price	Gross = Net × (1 + Rate ÷ 100)
Remove VAT	Net = Gross ÷ (1 + Rate ÷ 100)
VAT from Gross	VAT = Gross × Rate ÷ (100 + Rate)

VAT Formula Examples by Rate

Enter an amount and pick a rate to see the net, VAT, gross, and VAT-from-gross figures calculated instantly.

Amount

VAT Rate

These are common VAT/GST rates used for illustration, not an official list of every country’s current rate.

VAT Formula by Country

The mathematical formula is identical everywhere — only the applicable VAT rate changes by country. Select a country to see its standard rate applied to an example amount.

Country

VAT rates can change. Always verify the applicable rate with the relevant tax authority before using a calculation for official tax reporting.

VAT Formula for Businesses

The same add/remove formulas apply across everyday business tasks:

Pricing products — add VAT to a net cost to set a VAT-inclusive selling price.
Preparing quotations — show clients both the net and VAT-inclusive totals.
Creating invoices — calculate VAT per line item, then total.
Checking supplier invoices — verify the VAT charged matches Net × Rate ÷ 100.
Calculating VAT-exclusive costs — remove VAT from a supplier’s gross price.
Reviewing business expenses — extract reclaimable VAT from receipts using the reverse formula.

VAT Formula for Invoices

A simple line-item example showing exactly how each figure is calculated:

Sample Invoice Line

Product price (excl. VAT)£500.00

VAT rate20%

VAT (£500 × 20 ÷ 100)£100.00

Total (incl. VAT)£600.00

VAT Formula for Prices Including VAT

If a displayed price already includes VAT, use the reverse formula rather than the “add VAT” formula.

Retail price = £240, VAT = 20%
Net: £240 ÷ 1.20 = £200
VAT: £240 − £200 = £40

A VAT-exclusive price does not yet include VAT — add it. A VAT-inclusive price already includes VAT — remove it to find the net amount.

Common VAT Formula Mistakes

1Subtracting the rate directly to remove VAT
£120 − 20% is not £100. Divide by (1 + Rate ÷ 100) instead.
2Using the wrong VAT rate
Standard, reduced, and zero rates can all apply to different goods — check which one applies before calculating.
3Confusing net and gross prices
Always confirm whether your starting figure already includes VAT before choosing a formula.
4Forgetting VAT rates vary by country
The formula stays the same, but the rate must match the relevant jurisdiction.
5Rounding too early
Round only the final result, not intermediate steps, to avoid small cumulative errors.
6Applying the standard rate where a reduced or zero rate applies
Some goods and services qualify for a lower or 0% rate — verify the category first.
7Assuming every product has the same VAT treatment
VAT treatment can differ by product, service, and transaction type, even within one country.

VAT Formula Cheat Sheet

Quick Reference

Add VAT

Net × (1 + Rate/100) = Gross

Remove VAT

Gross ÷ (1 + Rate/100) = Net

VAT from Net

Net × Rate/100 = VAT

VAT from Gross

Gross × Rate/(100 + Rate) = VAT

Step-by-Step VAT Calculation

Identify whether your amount is net or gross.

Enter the correct VAT rate for the country and item.

Apply the appropriate add, remove, or reverse formula.

Check the VAT, net, and gross totals add up correctly.

VAT Formula FAQ

Related VAT Calculators

VAT Calculator → Add VAT Calculator → Remove VAT Calculator → Reverse VAT Calculator → VAT Rates → UK VAT Calculator → VAT Calculator by Country →

About These Calculations

The formulas on this page use standard percentage-based VAT mathematics and are applied exactly as shown. This page and its calculator do not replace professional tax advice — VAT treatment can differ depending on jurisdiction, product, service, and transaction. Always verify applicable rates and rules with your relevant tax authority before relying on a calculation for official tax reporting.

Last reviewed: August 2026

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