VAT Calculator
Add or remove VAT from a price.
Input sheet
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VAT and sales-tax math trips people up in one specific way: adding tax and removing tax are not symmetric. You cannot simply subtract the rate from a tax-inclusive price to find the net — you have to divide it back out.
How it works
Adding VAT multiplies by (1 + rate); removing it divides the gross by (1 + rate) to recover the net.
Adding VAT is straightforward: multiply the net amount by one plus the rate. Removing it is the reverse — you divide the gross price by one plus the rate to recover the net, then the difference is the VAT contained in the price.
The asymmetry matters because the VAT in a gross price is a smaller percentage of the gross than of the net. At a 20% rate, the VAT is 20% of the net but only one-sixth (about 16.7%) of the gross.
To add VAT: Gross = Net × (1 + rate). To remove VAT: Net = Gross ÷ (1 + rate), and VAT = Gross − Net.
Worked examples
Add 20% VAT to a net price of $100. → $120.00 gross, including $20.00 of VAT.
$100 × 1.20 = $120, and the VAT portion is the $20 added on top of the net.
Remove 20% VAT from a gross price of $120. → $100.00 net, with $20.00 of VAT removed.
$120 ÷ 1.20 = $100, and the $20 difference is the VAT that was baked into the gross price — not 20% of $120, which would over-subtract.
Tips & gotchas
- To pull VAT out of a gross price, never subtract the rate directly — divide by (1 + rate) instead.
- The VAT fraction of a gross price is rate ÷ (1 + rate); at 20% that is one-sixth of the total.
- Use the remove direction when a receipt shows only a tax-inclusive total and you need the pre-tax figure for accounting.
- This same divide-it-out method applies to any inclusive sales tax, not just VAT.
FAQ
Why can't I just subtract 20% to remove 20% VAT?
Because the VAT was added to the smaller net figure, not the gross. Subtracting 20% of the gross removes too much; you must divide the gross by 1.20 to get the correct net.
How much VAT is inside a tax-inclusive price?
It is rate ÷ (1 + rate) of the gross. At a 20% rate the VAT is one-sixth, or about 16.67%, of the inclusive price.
Is this the same as sales tax?
The arithmetic is identical for any percentage tax added to or included in a price. VAT differs in how it is collected through the supply chain, but adding and removing it uses the same formulas.
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