VAT (Value Added Tax) calculations appear in invoicing, expense reporting, and product pricing. The two common operations are adding VAT to a net price (net × (1 + rate) = gross) and extracting VAT from a gross price (VAT = gross − gross / (1 + rate)). This calculator handles both directions with common VAT rate presets for the UK, EU member states, and other VAT-registered jurisdictions.
UK standard VAT rate: 20%. UK reduced rate: 5% (domestic fuel, children's car seats, etc.). UK zero rate: 0% (most food, books, children's clothing). EU standard rates range from 17% (Luxembourg) to 27% (Hungary). The EU minimum standard rate is 15%. Many countries operate tiered systems with reduced rates for essentials. This calculator covers the arithmetic — verify the applicable rate with your tax authority for your specific goods/services.
VAT = gross − (gross ÷ (1 + rate)). For 20% VAT: VAT = gross × (20/120) = gross ÷ 6. A gross price of £120 contains £20 VAT. The net is £100.
Zero-rated goods have a 0% VAT rate — the supplier still registers for VAT and can reclaim input VAT. VAT-exempt goods are entirely outside the VAT system — the supplier cannot charge VAT and cannot reclaim input VAT on costs related to exempt supplies.
When your business's taxable turnover exceeds the VAT registration threshold in your country (£90,000 in the UK as of 2024). Below this, registration is optional. Requirements vary significantly by jurisdiction — check with your tax authority.
The reverse charge mechanism (where the buyer accounts for VAT rather than the seller) is common in B2B cross-border transactions within the EU. The arithmetic is the same, but the accounting treatment differs. This calculator handles the calculation; your accountant handles the VAT return treatment.
See also the Tip Calculator, Discount Calculator, and Currency Converter.