With this online VAT calculator, it is really easy to figure out the price of an article or service, including VAT. It also functions as a VAT reverse calculator, enabling you to get the direct value without VAT in a jiffy. Well, you will enjoy easy-to-follow formulas with example calculations for both including and excluding VAT, so the process is comprehensive but user-friendly.
What is VAT?
Value-Added Tax stands for VAT. Sales tax of a kind that is charged on the added value of the product or service. The tax is based on the percentage of the final prices that consumers pay.
With a convoluted process, everyone who adds value to the product is reimbursed for the tax they pay, and in the end, the consumer is still the one who pays the tax. This consumer could also be a company. VAT is one of the important revenue sources for many countries.
Since it is a consumption tax shared with all the people who are consuming, it is widely considered regressive vis à vis an equality of outcome advocate and people with low incomes in general. When we take into account the way this tax is applied uniformly across various countries that have it in their economies, it gets more convoluted.
Value-added tax (VAT), which is so far – especially in Europe and the EU but also used by some countries, is the main type.
Most commonly, the VAT is levied at approximately the same rates, from a minimum of 15% to a maximum of up to 25%, practically everywhere. A few specific sectors or types of goods and services may be zero-rated under the VAT. For example, education services and institutions books, school supplies, essential food and transportation typically are not subject to this tax.
At times, certain sectors are considered to be necessary for the economy to work as if on slide in an arbitrary fashion. Tourism in countries where it is a major driver of GDP would be an example of this. Most countries have a different VAT rate for some commodities or services. So, for example, the standard VAT rate could be 20%, but books shall be listed only as zero-rated objects, and likewise, travel accommodation services — the last subject can incur a VAT of 10%. This is why the availability of a VAT calculator is very useful.
VAT calculation formula
To calculate prices that include VAT using this VAT calculator, add a percentage to the base price, which is the amount before VAT. The formula is:
Price with VAT = Base Price x (100% + VAT(%))
Supposing that you have a base price of 100 euros and then a VAT of 15%, the total price is €100 x (100% + 15%): €100 x 115% = €115 (including VAT). This amounts to 100 EUR * 1.15.
Multiply 100 euros by 1.15 to find out how much sales tax is for any given gross amount in the currency.
VAT = Base Price x VAT(%)
For example, if the amount is 20€ and the tax rate is 10%, the VAT (Value Added Tax) = €20 * 10% €2. A very basic method for calculating the VAT is to multiply €20 by 0.1 of that amount in another word. Finally, the Net amount is nothing but the sum of the total amount and VAT: €20+ €2 = €22.
Price without VAT: to calculate this, divide the amount by one plus the overall VAT percentage. To Concretize it – a 20 % ( 0.2 ) VAT rate to divide by will return the price without VAT. We've got a VAT calculator at our disposal you can use to calculate the price without VAT, which then tells you the amount excluding VAT. For example, the VAT of 10% over €20 is €2, which is €20 * 10% = €2. The same as when you multiply it by 20 * 0.1, which is another way to deduct VAT. So the net amount is, of course, simply the gross amount plus tax amount, so €20 + €2 €22.
This is a simple enough variant of the formula, which allows for taking out VAT from the net price; you get that by dividing by ( 1 + VAT rate). In other words, VAT(increment that you asked for, a tax rate = 20%:.2 ) divided by 1.2 to get the gross amount. Also, our free VAT "undoer" is available if you wish to see the price ex. VAT by using the "Price without VAT" option.
VAT calculation examples
Example 1: The price before VAT is €80, and the service tax is 20%, so you can quickly calculate the total cost. You do not need to calculate VAT on your own. Simply €80 * (100%+ 20). That implies €80 * 120% = €80 * 1.2 = €96, to which you have to add sales tax.
Example 2: For example, if a product has 20% VAT and the final price is $50, you can get the VAT. Total price * VAT rate = $50 x 20% $ = $10. Thus, the VAT amount is $10.
Example 3: Given that the price of a good or service is €150 and the VAT is 20%, you have to determine how much the seller is charging. For this, you have to divide the total of the price with a 100%+VAT rate. To get that, you do: €150 / (100% + 20%) = €150 / 120% = €150 / 1.20 = €125 excluding VAT.
VAT rates in Europe
It is useful to know the usual European VAT rates. Here is a chart with European countries from the top (usually the highest VAT rate) to down (organized by standard VAT rates) for your convenience.
— It is October 2024, as this data comes from, though VAT usually stays stable to figure when were say this or that; maybe they have changed by the time of reading. Also, some products or services (like tourism, alcoholic beverages, healthcare, and education should be noted) may even have a special exception. So check the actual tax rate before you buy from a credible source. If You don't do that, you may end up under or overestimating the tax, which will, in the very end, be paid for.
Is it a VAT-inclusive price?
If you want to figure out if you have to charge VAT on a price, then first, you should ask if sales tax is already in that price. One of these rules, for many countries, (Including European Union (EU) merchants and any other service providers, is that any price, whether website or in real life, must be a price before Tax. To be more clear, some sellers list the following prices: Prices without VAT and VAT figures of the respective country and/or VAT Inclusive Prices in brackets throughout in some * or more detail in the footer of every page or terms & conditions. Questionable, ask. Almost all the time, you ought to have a right, at least in law, to know what is the actual charge going to be from the merchant (at the relevant VAT rate, the merchant).
The problem compounds further if both provider and consumer are VAT registered. This is normal to exchange pricing, minus the VAT, because the consumer will get back to that in the following month and is mostly looking at gross price. But when it comes to larger purchases, cash flow is always an issue in mind, so the net amount, including VAT, is what should be kept in view. Especially for such cases, our calculator is quite useful.