To add VAT, multiply the net price by the rate and add it on; to remove VAT from a VAT-inclusive (gross) price, divide the gross by 1 plus the rate as a decimal. At 20% VAT, a $100 net price becomes $120 gross ($100 × 1.20), and to reverse it you divide $120 by 1.20 to get back $100 net and $20 VAT. The single most expensive mistake is subtracting 20% from a gross price instead of dividing, which gives the wrong answer every time. The fastest route is our VAT calculator, but the math is quick to do by hand once you see why dividing is correct.
This matters because prices abroad are usually displayed VAT-inclusive. When you need the net figure for an expense claim, an invoice, a margin calculation, or a tax return, you have to pull the VAT back out of a gross number, and that is where the arithmetic trips people up. Below are the exact formulas, worked examples across the common rates (UK 20%, EU roughly 17% to 27%), the handy VAT fractions that let you do it in your head, and the by-hand method for when you do not have a calculator open.
Adding VAT to a net price
Adding VAT is the easy direction because you start from the net (VAT-exclusive) amount. There are two equivalent ways:
- VAT amount: net × rate. At 20%, $100 × 0.20 = $20.
- Gross price in one step: net × (1 + rate). At 20%, $100 × 1.20 = $120.
The gross price is simply the net price plus the VAT: $100 + $20 = $120. Use the one-step multiplier (1 + rate) when you only want the final figure, and the two-step version when you also need the VAT shown separately on an invoice.
| Net price | Rate | VAT amount | Gross price |
|---|---|---|---|
| $100.00 | 20% | $20.00 | $120.00 |
| $100.00 | 17% | $17.00 | $117.00 |
| $100.00 | 27% | $27.00 | $127.00 |
| $250.00 | 20% | $50.00 | $300.00 |
| $80.00 | 5% | $4.00 | $84.00 |
Removing VAT from a gross price
Removing VAT is the direction that causes errors. The gross price already contains the VAT, so you cannot just take a percentage off it. The correct formula is:
Net = Gross ÷ (1 + rate)
Then the VAT is whatever is left: VAT = Gross − Net. At 20%, a $120 gross price gives net = $120 ÷ 1.20 = $100, and VAT = $120 − $100 = $20. The same recipe works at any rate.
| Gross price | Rate | Divide by | Net price | VAT removed |
|---|---|---|---|---|
| $120.00 | 20% | 1.20 | $100.00 | $20.00 |
| $117.00 | 17% | 1.17 | $100.00 | $17.00 |
| $127.00 | 27% | 1.27 | $100.00 | $27.00 |
| $49.99 | 20% | 1.20 | $41.66 | $8.33 |
| $105.00 | 5% | 1.05 | $100.00 | $5.00 |
Why you divide instead of subtract
Subtracting the rate from a gross price is the classic VAT mistake, and it always lands too low. Here is the proof with $120 gross at 20%:
- Wrong (subtract 20%): $120 − ($120 × 0.20) = $120 − $24 = $96 net, implying $24 of VAT.
- Right (divide by 1.20): $120 ÷ 1.20 = $100 net, with $20 of VAT.
The subtract method is off by $4 on this small example, and it claims the VAT was $24 when it was actually $20. The reason is that the original 20% VAT was calculated on the net $100, not on the gross $120. So 20% of the gross ($24) is bigger than the VAT actually inside it ($20). Taking a percentage off the gross removes too much because you are applying the rate to a base that already includes the tax. Dividing by (1 + rate) correctly unwinds the multiplication that created the gross price in the first place.
The same error logic shows up in other places where a figure is grossed up, which is why understanding the inverse-of-a-percentage idea pays off. If percentage reversals trip you up generally, our percentage calculator and the percentage change calculator handle the related cases.
VAT fractions: removing VAT in your head
For mental math, every VAT rate has a VAT fraction that, multiplied by the gross price, gives the VAT directly. The fraction is rate ÷ (1 + rate). The cleanest one is 20%, where the fraction is exactly 1/6:
VAT in a 20% gross price = Gross × (1 ÷ 6). On $120, that is $120 ÷ 6 = $20.
| VAT rate | VAT fraction of gross | Approx. as fraction | Example: VAT in $600 gross |
|---|---|---|---|
| 5% | 0.047619 | 1/21 | $28.57 |
| 17% | 0.145299 | about 1/6.9 | $87.18 |
| 20% | 0.166667 | 1/6 | $100.00 |
| 23% | 0.186992 | about 3/16 | $112.20 |
| 25% | 0.200000 | 1/5 | $120.00 |
| 27% | 0.212598 | about 1/4.7 | $127.56 |
The two memorable ones are 1/6 for 20% VAT and 1/5 for 25% VAT. For the awkward rates, dividing by (1 + rate) is more reliable than trying to remember a messy fraction.
Standard, reduced, and zero rates: pick the right number first
Before you add or remove anything, you need the correct rate, because most VAT countries run several. Each country sets one standard rate (the default for most goods and services) plus one or more reduced rates for essentials like food, children's items, or energy, and a zero rate for certain categories such as some exports or basic foodstuffs.
The arithmetic is identical regardless; only the rate you plug in changes. A reduced rate of 5% on an $84 gross price gives net = $84 ÷ 1.05 = $80 and VAT = $4. A zero rate means there is literally no VAT to add or remove, so net equals gross. Using the standard rate on a reduced-rate item is a common way to overstate VAT, so confirm the category before you calculate.
Country rates and inclusive pricing in practice
Standard VAT rates cluster in a familiar band: the UK is 20%, and EU members run roughly 17% to 27%, with most between 19% and 25%. The exact figures change from time to time and differ by country, so this guide gives ranges rather than a definitive current table; for an authoritative, maintained overview see the European Commission's VAT rates pages.
The practical catch for US visitors is that displayed prices abroad almost always include VAT. A 49.99 price tag in a 20% VAT country is the final amount you pay, already containing $8.33 of VAT on a $41.66 net price. There is no surprise added at the register the way US sales tax appears. That is exactly when you need the remove-VAT formula: to back out the net price for an expense report or to compare a foreign quote against a US net price.
Working out VAT by hand and on paper
You can do either direction without a calculator app once the steps are clear.
- To add VAT: convert the rate to a decimal (20% becomes 0.20), multiply the net price by it for the VAT, then add that to the net for the gross. $250 × 0.20 = $50; gross = $300.
- To remove VAT: write the rate as (1 + decimal), so 20% becomes 1.20, then divide the gross by it for the net. $300 ÷ 1.20 = $250; VAT = $50.
- Shortcut for 20%: to find the VAT inside a gross price, just divide by 6. $300 ÷ 6 = $50.
For a spreadsheet, the formulas are equally short. If the net price sits in cell A2 and the rate (as a decimal like 0.2) in B2, then the gross is =A2*(1+B2) and the VAT is =A2*B2. To remove VAT from a gross price in A2, the net is =A2/(1+B2) and the VAT is =A2-A2/(1+B2). Lock the rate cell with $B$2 if you copy the formula down a column of prices.
One sale price, two adjustments
When an item is both discounted and VAT-inclusive, apply the discount to whichever base the seller specifies, then handle VAT separately if you need the net. Our discount calculator sorts the markdown, and the VAT calculator finishes the VAT side. For the full picture of why VAT is collected the way it is, our companion piece on how VAT works as a multi-stage tax explains the system end to end.
Get the exact figures instantly
Enter any net or gross amount and your rate into the VAT calculator to see the VAT and the other figure in one step, with no risk of the subtract-instead-of-divide mistake. It is the quickest way to check a foreign receipt, build an invoice, or back out the net price for your records.
Try it yourself
Run your own numbers in the free VAT Calculator — instant, private, no sign-up.
Open the VAT Calculator →Frequently asked questions
- How do I add VAT to a price?
- To add VAT, multiply the net price by the rate, then add the result to the net price. At 20%, a $100 net price gives $100 x 0.20 = $20 of VAT, for a $120 gross price. You can do it in one step by multiplying the net by (1 + rate), so $100 x 1.20 = $120. Use the two-step version when you need to show the VAT separately on an invoice.
- How do I remove VAT from a price?
- To remove VAT from a VAT-inclusive (gross) price, divide the gross by 1 plus the rate as a decimal. At 20%, $120 / 1.20 = $100 net, and the VAT is $120 - $100 = $20. Do not subtract the percentage from the gross price; that always removes too much. The divide method works at any rate: $117 / 1.17 = $100 at 17%, and $127 / 1.27 = $100 at 27%.
- Why can't I just subtract 20% to remove VAT?
- Subtracting 20% from a gross price removes too much because the original VAT was calculated on the smaller net amount, not the gross. On $120 gross at 20%, subtracting gives $120 - $24 = $96, but the correct net is $120 / 1.20 = $100, with $20 of VAT, not $24. The error is $4 on this example. Always divide by (1 + rate) to correctly unwind the VAT.
- What is the VAT fraction for 20%?
- The VAT fraction for 20% is 1/6, so the VAT inside any 20% gross price equals the gross divided by 6. On a $120 gross price, $120 / 6 = $20 of VAT. The fraction for 25% is 1/5. The general formula is rate / (1 + rate), which gives 0.166667 for 20% and 0.20 for 25%; for awkward rates, dividing by (1 + rate) is more reliable than a fraction.
- How do I calculate VAT in Excel?
- In Excel, put the net price in A2 and the rate as a decimal in B2. The VAT is =A2*B2 and the gross is =A2*(1+B2). To remove VAT from a gross price in A2, the net is =A2/(1+B2) and the VAT removed is =A2-A2/(1+B2). Lock the rate cell as $B$2 if you copy the formula down a column of prices so every row uses the same rate.
- What are the common VAT rates by country?
- Standard VAT rates cluster between about 17% and 27%. The UK standard rate is 20%, and EU members run roughly 17% to 27%, with most between 19% and 25%. Many countries also have reduced rates (often around 5% to 10%) for essentials and a zero rate for some categories. Exact figures change over time and differ by country, so confirm the current rate before you calculate.
- Are displayed prices abroad VAT-inclusive?
- Yes, in most VAT countries the displayed price already includes VAT, so the tag is the final amount you pay. A 49.99 tag in a 20% VAT country contains $8.33 of VAT on a $41.66 net price, with nothing added at the register, unlike US sales tax. To get the net figure for an expense claim or comparison, divide the gross by (1 + rate).
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