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Remove VAT formula: Net = Gross ÷ (1 + Rate/100) | VAT Amount = Gross − Net
All results rounded to 2 decimal places (standard accounting practice).
How to Calculate VAT — Add and Remove VAT Formulas
VAT (Value Added Tax) is a consumption tax levied at each stage of production and sale. Understanding how to add VAT to a net price and how to extract VAT from a gross price is essential for businesses, accountants, and anyone buying or selling goods internationally.
Remove VAT example: Gross £120 ÷ 1.20 = Net £100 | VAT = £20
VAT Rates by Country (2026)
| Country | Standard Rate | Reduced Rate | Zero Rate |
|---|---|---|---|
| United Kingdom | 20% | 5% | 0% |
| Germany | 19% | 7% | 0% |
| France | 20% | 5.5% / 10% | 0% |
| Ireland | 23% | 9% / 13.5% | 0% |
| Spain | 21% | 10% | 4% |
| Italy | 22% | 10% | 4% |
| Hungary | 27% | 18% | 5% |
| Luxembourg | 17% | 8% | 3% |
UK VAT Rates and What They Apply To
| Rate | Applies To |
|---|---|
| 20% Standard | Most goods and services — electronics, clothing, alcohol, restaurant meals |
| 5% Reduced | Domestic energy, children's car seats, mobility aids, some renovation work |
| 0% Zero | Food (most), children's clothing, books, newspapers, public transport |
| Exempt | Financial services, insurance, education, health services, postage |
Gross = Net × (1 + VAT Rate). Example: £100 net at 20% VAT = £100 × 1.20 = £120 gross. VAT amount = £20.
Net = Gross ÷ (1 + VAT Rate). Example: £120 gross at 20% VAT = £120 ÷ 1.20 = £100 net. VAT element = £20.
UK standard VAT rate is 20%. Reduced rate 5% for domestic energy and some goods. Zero rate (0%) for most food, children's clothing, books, and public transport.
EU member states set their own rates. Standard rates range from 17% (Luxembourg) to 27% (Hungary). Average EU standard rate is around 21%.
Exclusive (net): price before VAT — used in B2B invoicing. Inclusive (gross): price including VAT — what consumers pay at retail.
Calculating the net price from a VAT-inclusive gross: Net = Gross ÷ (1 + rate). Used when you have a receipt and need to know the net cost for accounting purposes.
No. VAT is collected at each production stage with businesses reclaiming input VAT. Sales tax is collected only at final sale to the consumer. VAT is used in UK/EU; sales tax in the US.
VAT-registered businesses reclaim VAT paid on business purchases (input VAT) from VAT collected on sales (output VAT), paying HMRC the net difference.
In the UK, most food is zero-rated. But hot takeaway food, restaurant meals, alcohol, confectionery, crisps, and ice cream are standard rated at 20%.
In the UK, you must register for VAT when taxable turnover exceeds £90,000. Once registered you must charge VAT on taxable sales and file VAT returns with HMRC.