VAT Calculator
Use this calculator to determine the Value Added Tax (VAT) amount, the net price, or the gross price of an item or service. Simply enter the original amount, the VAT rate, and specify whether the original amount already includes VAT or not.
Understanding Value Added Tax (VAT)
Value Added Tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed.
How VAT Works
VAT is typically levied by governments on goods and services. Businesses collect VAT on behalf of the government. When a business sells a product or service, it charges VAT to the customer. This is known as "output VAT". When the business buys goods or services from other businesses, it pays VAT on those purchases, which is known as "input VAT". The business then remits the difference between output VAT and input VAT to the tax authorities.
For consumers, VAT is usually included in the final price of goods and services, making it an indirect tax. The VAT rate varies significantly from country to country and can also differ for various types of goods and services within the same country.
Key Terms:
- Net Amount: This is the price of a product or service before VAT is added. It's also known as the ex-VAT price.
- VAT Rate: The percentage at which VAT is charged. Common rates can range from 5% to 27% depending on the country and product category.
- VAT Amount: The actual monetary value of the tax added to the net amount.
- Gross Amount: This is the total price of a product or service, including the VAT. It's also known as the inclusive-VAT price.
Using the VAT Calculator
Our VAT calculator simplifies the process of determining VAT amounts, net prices, and gross prices. Here's how to use it:
- Original Amount: Enter the initial price of the item or service. This can be either the net price (excluding VAT) or the gross price (including VAT).
- VAT Rate (%): Input the applicable VAT percentage. For example, if the rate is 20%, enter '20'.
- Original Amount Is: Select whether the 'Original Amount' you entered is the 'Net (Excludes VAT)' or 'Gross (Includes VAT)'. This tells the calculator how to interpret your input.
- Calculate VAT: Click the button to see the results. The calculator will display the Net Amount, VAT Amount, and Gross Amount.
Examples:
Example 1: Calculating VAT from a Net Amount
- You have a product with a Net Amount of 100.00.
- The VAT Rate is 20%.
- You select "Original Amount Is: Net (Excludes VAT)".
- Calculation:
- VAT Amount = 100.00 * (20 / 100) = 20.00
- Gross Amount = 100.00 + 20.00 = 120.00
- Result: Net Amount: 100.00, VAT Amount: 20.00, Gross Amount: 120.00
Example 2: Calculating Net Amount and VAT from a Gross Amount
- You bought an item for a Gross Amount of 120.00.
- The VAT Rate is 20%.
- You select "Original Amount Is: Gross (Includes VAT)".
- Calculation:
- Net Amount = 120.00 / (1 + (20 / 100)) = 120.00 / 1.20 = 100.00
- VAT Amount = 120.00 – 100.00 = 20.00
- Result: Net Amount: 100.00, VAT Amount: 20.00, Gross Amount: 120.00
This calculator is a handy tool for businesses, freelancers, and consumers alike to quickly understand the VAT component of prices and ensure accurate financial planning and reporting.