VAT Calculator — Free Online Value Added Tax Calculator

How to Use the VAT Calculator

Our VAT calculator offers two modes to handle any Value Added Tax calculation you might need. Whether you are a business owner preparing invoices, a freelancer quoting clients in different countries, or a consumer trying to understand the tax breakdown on a purchase, follow these steps for accurate results.

1. Select your calculation mode. Choose "Add VAT" when you know the net (before-tax) price and want to find the VAT-inclusive total. This is common when creating invoices or quoting prices. Choose "Remove VAT" when you have a gross (tax-inclusive) price and need to determine the net amount and VAT component. This is useful when analyzing receipts or reconciling accounts.
2. Enter the amount. Input the price in the amount field. In "Add VAT" mode, this is the net amount before tax. In "Remove VAT" mode, this is the gross amount including tax. The calculator accepts any positive number and works with any currency since VAT percentages are universal.
3. Choose your VAT rate. Select a country from the dropdown to automatically populate the standard VAT rate for that country. The calculator includes rates for major economies across Europe, Asia, and the Americas. If your country is not listed or you need a non-standard rate (such as a reduced rate for food or books), select "Custom" and enter the rate manually.
4. Review your complete breakdown. The results panel instantly displays the net amount, VAT amount, and gross amount. The pie chart provides a visual representation of how much of the total price is tax versus the actual product cost. All figures update in real time as you adjust any input.

The calculator handles edge cases automatically. If you enter a zero or negative amount, it returns zero values. This makes it safe for use in automated workflows or spreadsheet integrations where invalid inputs might occur.

Understanding the VAT Formula

VAT calculations use two straightforward formulas depending on whether you are adding or removing tax. Understanding these formulas helps you verify calculations and handle VAT in spreadsheets or accounting software.

Adding VAT (Net to Gross)

Where each variable represents:

• Net Amount = Price before tax (what the seller receives minus tax)
• VAT Rate = Tax percentage (for example, 20 for 20% VAT)
• Gross Amount = Total price the buyer pays including tax

Removing VAT (Gross to Net)

A common mistake is to simply calculate the percentage of the gross amount. For example, with 20% VAT on a gross price of $120, the VAT is NOT $24 (20% of $120). The correct calculation is $120 / 1.20 = $100 net, so VAT = $20. This is because the 20% applies to the net amount, not the gross amount.

Step-by-Step Calculation Example

A freelance designer in the UK charges a net fee of $2,500 for a project. The standard UK VAT rate is 20%. Calculate the total invoice amount:

1. Identify the net amount: $2,500
2. Calculate VAT: $2,500 × (20 / 100) = $500
3. Calculate gross amount: $2,500 + $500 = $3,000
4. Verify by removing VAT: $3,000 / 1.20 = $2,500 (matches the net amount)

The designer invoices the client for $3,000 total. The $500 VAT portion is collected on behalf of the government and must be remitted in the next VAT return, less any input VAT the designer can reclaim on business expenses.

Practical VAT Examples

These real-world scenarios demonstrate how VAT calculations apply across different business situations and countries. Each example uses actual VAT rates as of 2026.

E-Commerce Business: Multi-Country Pricing

Elena runs an online store selling handmade candles for a net price of $45 each. She ships to multiple European countries and needs to calculate the correct VAT-inclusive price for each market. For the UK (20% VAT): $45 × 1.20 = $54.00 total, with $9.00 VAT. For Germany (19%): $45 × 1.19 = $53.55, with $8.55 VAT. For Sweden (25%): $45 × 1.25 = $56.25, with $11.25 VAT. For Switzerland (8.1%): $45 × 1.081 = $48.65, with $3.65 VAT. The price difference between the cheapest (Switzerland) and most expensive (Sweden) market is $7.60 per candle, entirely due to different VAT rates. Elena must display the VAT-inclusive price to consumers in each country.

Restaurant Owner: Analyzing Receipt Costs

Marcus owns a restaurant in Italy where the standard VAT rate is 22%. He receives a supplier invoice for $8,540 including VAT for food supplies. To determine his actual cost and the VAT he can reclaim, he uses the remove VAT calculation: Net cost = $8,540 / 1.22 = $7,000. VAT paid = $8,540 - $7,000 = $1,540. Marcus records $7,000 as a business expense and $1,540 as input VAT to reclaim. In the same period, his restaurant generates $32,000 in sales (including 10% reduced VAT on food): Net sales = $32,000 / 1.10 = $29,091. Output VAT = $2,909. He remits $2,909 - $1,540 = $1,369 to the Italian tax authority.

Freelancer: International Service Invoicing

David is a web developer based in Denmark (25% VAT) who works with clients in multiple countries. For a Danish client, he quotes $10,000 net and invoices $12,500 including 25% VAT. For a German business client, the reverse charge mechanism applies, so he invoices $10,000 with 0% VAT and the German client self-assesses German VAT. For a US client (no VAT system), he invoices $10,000 with no VAT. For a UK consumer (post-Brexit), he charges $10,000 plus 25% Danish VAT ($2,500) since the client is not a VAT-registered business. Understanding which rate applies based on the customer type and location is essential for correct invoicing.

Tourist: Claiming VAT Refund on Purchases

Yuki is visiting Paris from Japan and purchases a designer handbag for 2,400 EUR including 20% French VAT. The net price is 2,400 / 1.20 = 2,000 EUR, meaning 400 EUR is VAT. Through the French tax-free shopping scheme (detaxe), non-EU tourists spending over 100.01 EUR at a single store can reclaim a portion of the VAT. After the refund service fee, Yuki recovers approximately 280 EUR (about 12% of the purchase price rather than the full 20%, because refund services charge a commission). She processes the refund electronically at the airport before departure using the PABLO kiosk system.

VAT Tips and Complete Guide

Understanding VAT is essential for businesses operating internationally and for consumers wanting to know exactly what they are paying in taxes. These tips cover practical aspects of VAT that affect everyday business decisions.

Know When to Register for VAT

Each country has a VAT registration threshold below which small businesses are not required to charge VAT. In the UK, the threshold is 90,000 GBP (updated 2026). In Germany, the Kleinunternehmerregelung exempts businesses earning under 22,000 EUR. In France, the threshold varies by business type (36,800 EUR for services, 91,900 EUR for goods). Voluntarily registering before reaching the threshold can be beneficial if your customers are VAT-registered businesses (since they can reclaim the VAT anyway) and you have significant input VAT to reclaim on your own purchases.

Keep Accurate Records for VAT Returns

Maintain detailed records of all sales and purchases with VAT amounts. Every VAT invoice must include your VAT registration number, the date, a sequential invoice number, your name and address, the customer name and address, a description of goods or services, the quantity, the net amount, the VAT rate applied, and the total VAT amount. Digital record-keeping is now mandatory in many countries. The UK requires Making Tax Digital (MTD) compliant software for all VAT-registered businesses. Keep records for at least 6 years (or as required by your country) in case of tax authority audits.

Understand Reduced and Zero Rates

Most countries with VAT have multiple rate tiers. Using the wrong rate on invoices can result in penalties or require correction filings. In the UK, children's clothing and most food items are zero-rated (0%), while domestic energy and car seats are at the reduced rate (5%), and most other goods and services are at the standard rate (20%). Financial services, insurance, and education are VAT-exempt (no VAT charged, but also no input VAT recovery). The distinction between zero-rated and exempt matters for businesses: zero-rated businesses can still reclaim input VAT, while exempt businesses cannot.

Plan for VAT Cash Flow Impact

VAT can significantly impact your cash flow. You collect VAT on sales but may not need to remit it for weeks or months. Conversely, you pay VAT on purchases immediately but may not recover it until filing your next return. For businesses with large capital expenditures, this timing difference can be substantial. Some countries offer cash accounting schemes where VAT is only due when you actually receive payment from customers, rather than when you issue the invoice. This can help businesses that regularly deal with late-paying customers.

Common Mistakes to Avoid

• Calculating VAT on the gross amount. The most common error is applying the VAT percentage to the gross (tax-inclusive) amount instead of the net amount. If an item costs $120 including 20% VAT, the VAT is NOT $24. The correct VAT is $20 ($120 / 1.20 = $100 net, $120 - $100 = $20 VAT).
• Using the wrong country VAT rate. For digital services and e-commerce, VAT must be charged at the customer's country rate, not the seller's country rate. A UK-based SaaS company selling to a German consumer must charge 19% (Germany's rate), not 20% (UK rate).
• Missing VAT registration deadlines. In most countries, you must register for VAT within 30 days of exceeding the threshold. Late registration can result in penalties and back-dated VAT obligations. Monitor your turnover and register proactively.
• Forgetting reverse charge on B2B cross-border services. When purchasing services from businesses in other EU countries, the reverse charge mechanism requires you to self-assess VAT rather than paying it on the supplier's invoice. Failing to account for this correctly can lead to under-declarations.
• Not reclaiming input VAT on eligible purchases. Many businesses, especially small ones, fail to reclaim VAT on all eligible business expenses, including office supplies, professional services, and travel. This effectively overpays tax and reduces profitability.