How to Calculate VAT — Formulas, Country Rates, and Common Mistakes

You received an invoice showing a total amount — but you need to split it into net and VAT for your accounting.

Many people multiply the total by the tax rate (e.g. × 0.20) to get the VAT. This is wrong, and it’s the most common VAT calculation mistake.

Here’s the correct way to calculate VAT, with formulas for every major country.

Try the VAT Calculator →

The Most Common VAT Calculation Mistake

Let’s say you receive an invoice for £1,200 (UK, 20% VAT).

Wrong (× 0.20) £1,200 × 0.20 = VAT £240? Net £960?

Correct (÷ 1.20) £1,200 ÷ 1.20 = Net £1,000 £1,200 − £1,000 = VAT £200

The wrong method gives you £40 too much in VAT. The bigger the amount, the bigger the error.

Why Is × Rate Wrong?

The gross amount already includes VAT. When you multiply the gross by the rate, you’re calculating tax on top of tax.

• Net × Rate = VAT ✓ (correct — tax on the pre-tax amount)
• Gross × Rate = VAT ✗ (wrong — tax on an amount that already contains tax)

The correct formula is always: Gross ÷ (1 + Rate) to get Net first, then subtract.

VAT Formulas

What you have	What you need	Formula
Gross (incl. VAT)	Net	Gross ÷ (1 + Rate)
Gross (incl. VAT)	VAT	Gross − Net
Net (excl. VAT)	VAT	Net × Rate
Net (excl. VAT)	Gross	Net + VAT

VAT Rates by Country

Country	Standard Rate	Reduced Rate
🇬🇧 United Kingdom	20%	5%
🇩🇪 Germany	19%	7%
🇫🇷 France	20%	5.5%
🇪🇸 Spain	21%	10% / 4%
🇮🇹 Italy	22%	10%
🇳🇱 Netherlands	21%	9%
🇨🇦 Canada (GST)	5%	—
🇦🇺 Australia (GST)	10%	—
🇮🇳 India (GST)	18%	5% / 12%
🇸🇬 Singapore (GST)	9%	—
🇰🇷 South Korea	10%	—
🇯🇵 Japan	10%	8%

Note: Canada has additional provincial sales taxes (PST/HST) that vary by province.

Real-World Examples

Freelancer in the UK A client pays £3,600 for a project. You need to report VAT to HMRC. £3,600 ÷ 1.20 = Net £3,000 / VAT £600.

Online seller in Germany You sell a product for €119. The customer paid including 19% MwSt. €119 ÷ 1.19 = Net €100 / MwSt. €19.

Service provider in Canada An invoice totals CAD $525 including 5% GST. $525 ÷ 1.05 = Net $500 / GST $25.

Calculate your VAT instantly →

How to Use the VAT Calculator

1. Go to VAT Calculator
2. Select your country from the rate panel (or enter a custom rate)
3. Choose “Total (VAT included)” or “Net amount (before VAT)”
4. Type the amount — results appear instantly

No sign-up required. No ads blocking the calculator. Just type and get your answer.

FAQ

Q. How do I calculate VAT from a gross amount? Divide by (1 + VAT rate). For UK 20%: Gross ÷ 1.20 = Net. VAT = Gross − Net.

Q. What is the difference between VAT and sales tax? VAT is collected at every stage of production. Sales tax is collected only at the final sale. The US uses sales tax; most other countries use VAT.

Q. Which countries use GST instead of VAT? Canada, Australia, India, Singapore, and New Zealand use GST. The calculation method is identical.

Q. Can I use this calculator for any VAT rate? Yes. Select a country for preset rates, or enter any custom rate from 0% to 100%.