VAT Calculator
Calculate Value Added Tax (VAT) for business transactions
Value Added Tax (VAT)
What is VAT?
Value Added Tax (VAT) is a consumption tax placed on products and services whenever value is added at each stage of the supply chain, from production to the point of sale.
VAT is collected by businesses on behalf of the government and is ultimately paid by the end consumer. It's commonly used throughout the European Union and many other countries worldwide.
Different countries have different VAT rates, and many use multiple rates for different categories of goods and services.
VAT Calculation Methods:
Adding VAT to Net Amount
VAT Amount = Net Amount × VAT Rate
Gross Amount = Net Amount + VAT Amount
Used when you have a price without VAT and need to calculate the final price including VAT.
Removing VAT from Gross Amount
Net Amount = Gross Amount ÷ (1 + VAT Rate)
VAT Amount = Gross Amount - Net Amount
Used when you have a price that already includes VAT and need to calculate how much of it is the VAT amount.
VAT vs. Sales Tax
- VAT is collected at each stage of the supply chain where value is added
- Sales tax is only collected at the final point of sale to the end consumer
- VAT is used in most European countries and many others worldwide
- Sales tax is common in the United States, varying by state and local jurisdiction
- VAT is claimed back by businesses for business-to-business transactions
United Kingdom VAT Information
Standard Rate: 20%
Reduced Rates: 5%, 0%
Zero rate (0%) applies to essential items like food and children's clothes.
Calculate VAT
Calculation Mode
VAT Rate
$
VAT Calculation Results
Net Amount (excl. VAT):
$0.00
VAT Amount (20%):
$0.00
Gross Amount (incl. VAT):
$0.00
Calculation Summary:
$0.00 + 20% VAT ($0.00) = $0.00
Bulk VAT Calculator
Calculate VAT for multiple items at once. Useful for invoices or shopping lists.
| Description | Amount | VAT Rate | VAT Amount | Total | |
|---|---|---|---|---|---|
$ | % | $20.00 | $120.00 | ||
| $0.00 | $0.00 | $0.00 |
Common VAT Questions
How does VAT work for businesses?
Businesses registered for VAT charge VAT on their sales (output tax) and can reclaim VAT on their purchases (input tax). They submit periodic VAT returns to the tax authority, paying the difference between output and input tax. This way, the VAT is effectively passed along the supply chain until it reaches the final consumer.
Who needs to register for VAT?
Registration requirements vary by country, but generally businesses must register for VAT when their taxable turnover exceeds the threshold set by the tax authority. For example, in the UK, the threshold is £85,000 per year. Businesses below the threshold can register voluntarily if it benefits them.
What's the difference between zero-rated and exempt?
Zero-rated goods have VAT charged at 0%, meaning businesses can still reclaim input VAT related to these sales. Exempt goods are outside the VAT system entirely—no VAT is charged on sales, but businesses cannot reclaim input VAT related to these sales. Zero-rated is generally better for businesses than exempt status.
How does VAT work for international transactions?
For exports, goods are typically zero-rated, meaning no VAT is charged. For imports, VAT is usually paid at the point of entry into the country. Within the EU, there's a special system for B2B transactions called the reverse charge mechanism, where the buyer accounts for VAT instead of the seller. The rules can be complex and vary by country and type of goods or services.
What records do I need to keep for VAT?
Businesses must keep detailed records of all VAT transactions, including VAT invoices, receipts, and a VAT account showing the VAT charged and paid. These records typically need to be kept for a specified period (e.g., 6 years in the UK). Many countries now require digital record-keeping and electronic VAT returns as part of making tax digital initiatives.