VAT / Sales Tax Calculator
Add or remove VAT (sales tax) from a price.
What you provide
Result
Gross (incl. tax): 120
Adding tax multiplies by the rate; removing it divides — you cannot just subtract the same percentage you would add, which is a common mistake.
- Gross (incl. tax)
- 120
- Tax
- 20
What this cannot tell you
- Pure arithmetic on the values you enter.
Take this with you
How this calculation works
Adding tax multiplies the net amount by the rate; removing it divides the gross by one-plus-the-rate. The two are not symmetric, which is the mistake this avoids.
What the results mean
- Add vs remove
- To add 20% you multiply by 1.2; to remove it you divide by 1.2 — not subtract 20%, which would be wrong.
Common problems and fixes
- The net figure does not match my invoice by a penny
- Rounding. Tax is normally rounded to the smallest currency unit at a defined point — per line or per invoice, depending on the jurisdiction and the accounting system — and the two approaches can differ by a penny on a multi-line document. That is expected rather than an error, and the invoice total is the figure of record.
- I am not sure which rate applies
- Rates vary by country and by category, with reduced or zero rates for things like food, books, children's clothing and some services, and the boundaries are genuinely fiddly. The calculator applies whatever rate you enter and cannot know which one is correct — check your tax authority's guidance for the specific goods.
- Applying a discount and tax gives different totals depending on order
- Because they do give different totals. A discount applied before tax reduces the taxable amount and so reduces the tax; applied afterwards it does not. Follow whichever order your invoicing or accounting system uses, and be consistent — the difference is small per line and visible across a year.
Frequently asked questions
Why can’t I just subtract 20% to remove VAT?
Because the 20% was added to the net, not the gross. Removing it means finding the number that becomes the gross when increased by 20% — you divide by 1.2. Subtracting 20% of the gross takes off too much.
What is the difference between VAT and sales tax?
VAT is charged at each stage of the supply chain, with businesses reclaiming what they paid on inputs, so the tax accumulates gradually and the consumer bears the total. US-style sales tax is charged once at the final sale. The arithmetic here is the same for both; the difference is in who remits what, and when.
Are prices quoted with or without VAT?
It depends on the audience, and the convention differs by region. Consumer prices in the UK and EU are quoted inclusive by law, while business-to-business prices are usually quoted excluding it and US prices are typically shown before sales tax. Knowing which convention a figure follows is the first step in any of these calculations.
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