VAT Calculator

What is VAT?

Value Added Tax (VAT) is a consumption tax applied to goods and services at each stage of production and distribution. This VAT calculator helps businesses and consumers understand how VAT affects pricing. Unlike sales tax, which is only charged at the point of sale, VAT is collected incrementally throughout the supply chain, with businesses able to reclaim VAT on their purchases.

VAT Rates Around the World

Different countries apply different VAT rates. Standard rates typically range from 15% to 25%, with the UK at 20%, Germany at 19%, and Scandinavian countries at 25%. Most countries also offer reduced rates (5-15%) for essential goods like food and children's items, and zero rates for specific categories like books and newspapers. Use this VAT calculator to compare how these rates impact your pricing.

Adding vs Removing VAT

When adding VAT, you multiply the net price by (1 + VAT rate). For example, $100 + 20% VAT = $120. When removing VAT (reverse calculation), you divide the gross price by (1 + VAT rate). For example, $120 / 1.20 = $100 net. This VAT calculator handles both calculations automatically, helping you understand the true cost before and after tax.

VAT for Businesses

Businesses registered for VAT collect VAT on their sales (output tax) and pay VAT on their purchases (input tax). The difference is remitted to or reclaimed from tax authorities. Understanding these calculations with a VAT calculator is crucial for pricing products correctly, managing cash flow, and ensuring compliance with tax regulations. Most businesses must register for VAT once their taxable turnover exceeds the country-specific threshold.