What is the difference between VAT and sales tax?

VAT is collected at every stage of the supply chain, with each business paying VAT on its purchases and collecting VAT on its sales. Sales tax is only collected once at the final point of sale to the consumer. The end effect on the consumer is similar, but the collection mechanism differs.

Why can I not simply subtract the VAT percentage from the gross price?

Because VAT was added to the net price, not the gross price. If the net price is $100 and VAT is 20%, the gross price is $120. Subtracting 20% of $120 gives $24, not the correct VAT of $20. You must divide by (1 + rate) to reverse the calculation accurately.

Does this calculator support different VAT rates?

Yes. You can enter any VAT or GST percentage. Simply type the rate that applies to your country or product category and the calculator adjusts automatically.

How to Calculate VAT

4 min readBusiness

Value Added Tax (VAT) is a consumption tax applied in most countries outside the United States. Whether you need to add VAT to a net price before sending an invoice or extract the VAT component from a gross price for your accounting records, the calculations are straightforward once you know the formulas. This guide explains both directions and shows you how Toolin's VAT Calculator handles them instantly.

Quick Steps

1
Open the VAT Calculator
Go to Toolin's VAT Calculator tool.
2
Select add or remove VAT
Choose whether to add VAT to a net price or extract it from a gross price.
3
Enter amount and rate
Input the price and the VAT percentage for your region.
4
Read the breakdown
The tool shows net price, VAT amount, and gross price instantly.

VAT/GST Calculator

Add or remove VAT/GST tax from any amount

Open Tool

Adding VAT to a Net Price

VAT Amount  = Net Price x (VAT Rate / 100)
Gross Price = Net Price + VAT Amount

Example (20% VAT):
  Net Price   = $500.00
  VAT Amount  = $500.00 x 0.20 = $100.00
  Gross Price = $500.00 + $100.00 = $600.00

Removing VAT from a Gross Price

Net Price  = Gross Price / (1 + VAT Rate / 100)
VAT Amount = Gross Price - Net Price

Example (20% VAT):
  Gross Price = $600.00
  Net Price   = $600.00 / 1.20 = $500.00
  VAT Amount  = $600.00 - $500.00 = $100.00

How to Use the VAT Calculator

Open the VAT Calculator

Navigate to Toolin's VAT Calculator in your browser.

Choose add or remove VAT

Select whether you want to add VAT to a net price or extract VAT from a gross price.

Enter the amount and VAT rate

Type the price and the applicable VAT percentage (e.g., 20%, 19%, 5%).

View the results

The calculator displays the net price, VAT amount, and gross price side by side.

Common VAT Rates by Region

United Kingdom: 20% standard, 5% reduced, 0% zero-rated
Germany: 19% standard, 7% reduced
France: 20% standard, 10% intermediate, 5.5% reduced
Australia (GST): 10%
Canada (GST/HST): 5-15% depending on province

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Frequently Asked Questions

What is the difference between VAT and sales tax?: VAT is collected at every stage of the supply chain, with each business paying VAT on its purchases and collecting VAT on its sales. Sales tax is only collected once at the final point of sale to the consumer. The end effect on the consumer is similar, but the collection mechanism differs.
Why can I not simply subtract the VAT percentage from the gross price?: Because VAT was added to the net price, not the gross price. If the net price is $100 and VAT is 20%, the gross price is $120. Subtracting 20% of $120 gives $24, not the correct VAT of $20. You must divide by (1 + rate) to reverse the calculation accurately.
Does this calculator support different VAT rates?: Yes. You can enter any VAT or GST percentage. Simply type the rate that applies to your country or product category and the calculator adjusts automatically.