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Quick Tax Calculation

VAT Calculator

Quickly compute value-added tax additions or removals with standard and custom rates.

Inputs

Taxation Basics

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.

Adding VAT

To add VAT to a price, multiply the net price by (1 + VAT rate). For example, if the net price is $100 and the VAT rate is 20%:
Gross Price = 100 * (1 + 0.20) = $120

Removing VAT

To remove VAT from a gross price to find the net price, divide the gross price by (1 + VAT rate). For example, if the gross price is $120 and the VAT rate is 20%:
Net Price = 120 / (1 + 0.20) = $100VAT Amount = $120 - $100 = $20

VAT vs. Sales Tax

While both VAT and Sales Tax are indirect taxes collected on behalf of governments, their execution differs fundamentally:

  • VAT: Collected at every stage of the production chain. Producers, wholesalers, and retailers all collect VAT on their sales, but they can offset the tax they paid on their purchases. The final burden lies entirely on the consumer.
  • Sales Tax: Only collected at the final point of sale to the consumer. B2B transactions are usually exempt via resale certificates.

Typical VAT Rates Around the World

Below is a general reference of standard VAT rates in major economies:

Country/RegionStandard VAT RateLocal Name
United Kingdom20%VAT
Germany19%MwSt.
France20%TVA
Australia10%GST
China13%增值税

How VAT is Administered

Registered businesses act as tax collectors. They calculate their net VAT payable by subtracting the input tax (tax paid on business inputs) from the output tax (tax charged to customers). If output tax exceeds input tax, the difference is paid to the government. If input tax is higher, the business can claim a refund.