How to Calculate VAT
VAT (Value Added Tax) is a percentage-based tax added to the price of goods and services. This guide explains how to add VAT to a price, remove it, and find the VAT amount using a simple formula.
The VAT formula
There are three common VAT calculations:
| What you want to find | Formula |
|---|---|
| VAT amount | Ex-VAT price × VAT rate ÷ 100 |
| VAT-inclusive price | Ex-VAT price × (1 + VAT rate ÷ 100) |
| Ex-VAT price (reverse) | VAT-inclusive price ÷ (1 + VAT rate ÷ 100) |
How to add VAT to a price
- Multiply the ex-VAT price by the VAT rate and divide by 100 to find the VAT amount.
- Add the VAT amount to the ex-VAT price.
Example: A product costs £80 ex-VAT. UK VAT rate is 20%.
VAT amount = £80 × 20 ÷ 100 = £16
VAT-inclusive price = £80 + £16 = £96
Or use the shortcut: £80 × 1.20 = £96 (multiply by 1 + rate/100).
How to remove VAT from a price
If you have a VAT-inclusive price and want the ex-VAT amount, divide by (1 + VAT rate ÷ 100).
Example: A price tag shows £120 including 20% VAT.
Ex-VAT price = £120 ÷ 1.20 = £100
VAT amount = £120 − £100 = £20
A common mistake is to subtract 20% from the VAT-inclusive price. That gives £96, not £100, because 20% of £120 is £24 — not the same as 20% of £100. Always divide, never subtract a percentage.
Worked examples at common VAT rates
| Ex-VAT price | VAT rate | VAT amount | Inc-VAT price |
|---|---|---|---|
| £50 | 20% (UK) | £10.00 | £60.00 |
| £200 | 20% (UK) | £40.00 | £240.00 |
| €150 | 21% (NL) | €31.50 | €181.50 |
| €100 | 19% (DE) | €19.00 | €119.00 |
| €75 | 25% (SE) | €18.75 | €93.75 |
| A$300 | 10% (AU GST) | A$30.00 | A$330.00 |
Calculate VAT instantly
Use the free VAT Calculator: enter the VAT rate in the first field and the ex-VAT price in the second. The result is the VAT amount — add it to the price to get the total.
VAT rates by country
| Country | Standard rate | Reduced rate(s) |
|---|---|---|
| United Kingdom | 20% | 5%, 0% |
| Germany | 19% | 7% |
| France | 20% | 10%, 5.5%, 2.1% |
| Netherlands | 21% | 9% |
| Sweden | 25% | 12%, 6% |
| Ireland | 23% | 13.5%, 9%, 0% |
| Spain | 21% | 10%, 4% |
| Italy | 22% | 10%, 5%, 4% |
| Australia (GST) | 10% | 0% |
VAT vs sales tax
VAT is charged at every stage of the supply chain. A manufacturer, wholesaler, and retailer each add VAT, but can reclaim the VAT they paid on their inputs. The final consumer cannot reclaim and bears the full cost.
US sales tax is only charged once, at the point of sale to the end consumer. The calculation method is identical — multiply the price by the tax rate — but the mechanism is different.
FAQ
How do I calculate 20% VAT?
Multiply the ex-VAT price by 0.20 to find the VAT amount, then add it to the price. For £150: £150 × 0.20 = £30 VAT, total = £180.
How do I remove 20% VAT from a price?
Divide the VAT-inclusive price by 1.20. For £240 including VAT: £240 ÷ 1.20 = £200 ex-VAT.
How do I check if a price includes VAT?
In the UK and EU, prices shown to consumers must include VAT. B2B prices are often quoted ex-VAT. Look for labels like “inc. VAT”, “incl. BTW”, or “ex-VAT” — or check the invoice.
Is VAT the same as BTW?
Yes. BTW is the Dutch abbreviation for Belasting over de Toegevoegde Waarde, which translates directly to Value Added Tax. MwSt (German), TVA (French), and IVA (Spanish/Italian) are all the same tax with different names.