VAT formulas
Adding VAT to a net price:
Gross = Net + VAT
Removing VAT from a gross (VAT-inclusive) price:
VAT = Gross − Net
Example (UK, 20%): £120 including VAT is £100 net plus £20 VAT. A common mistake is taking 20% of £120 (£24) — that overstates the VAT. To remove 20% VAT, divide by 1.2, or multiply the gross by 1/6 to get the VAT.
Standard VAT rates by country
| Country | Standard rate |
|---|---|
| United Kingdom | 20% |
| Ireland | 23% |
| Germany | 19% |
| France | 20% |
| Italy | 22% |
| Spain | 21% |
| Netherlands | 21% |
| Belgium | 21% |
| Austria | 20% |
| Portugal | 23% |
| Poland | 23% |
| Sweden | 25% |
| Denmark | 25% |
| Finland | 25.5% |
| Norway | 25% |
| Switzerland | 8.1% |
| United Arab Emirates | 5% |
| Saudi Arabia | 15% |
| South Africa | 15% |
| Australia (GST) | 10% |
| New Zealand (GST) | 15% |
| Singapore (GST) | 9% |
| Canada (federal GST) | 5% |
| Japan (consumption tax) | 10% |
| Mexico (IVA) | 16% |
Most countries also have reduced rates (for example 5% or 0% in the UK for some goods such as children's car seats, domestic energy, food and books). Rates change — check your tax authority (HMRC in the UK, or your country's revenue service) for the rate that applies to your product or service.
VAT tips for small businesses and freelancers
- UK VAT registration is compulsory when your VAT-taxable turnover goes over £90,000 in a rolling 12 months.
- Show prices clearly. Consumers expect VAT-inclusive prices; business customers often want net prices with VAT shown separately.
- Selling to other countries? Digital services to consumers abroad are usually taxed at the customer's local rate.
- Keep VAT invoices so you can reclaim VAT you pay on business purchases.
Selling in India? Use the GST calculator with CGST, SGST and IGST.
Frequently asked questions
How do I calculate 20% VAT?
To add 20% VAT, multiply the net amount by 1.2. To remove 20% VAT from a gross amount, divide by 1.2. The VAT included in a gross price is one sixth of it.
What is the VAT rate in the UK?
The standard UK VAT rate is 20%. A reduced 5% rate and a 0% rate apply to certain goods and services.
Is GST the same as VAT?
Broadly yes. GST in Australia, New Zealand, Singapore, Canada and India works like VAT: a tax on consumption collected at each stage of supply.
Does the US have VAT?
No. The US uses state and local sales taxes instead, which are added at the till and vary by state and city.