VAT / Sales Tax

Net, tax, and gross

Value-added tax (VAT) and many sales taxes are a percentage of the taxable net amount. Receipts may show a price excluding tax (net) or including tax (gross). This calculator switches between those two starting points and shows net, tax, and gross together.

Formulas

• From net: tax = net × rate ÷ 100; gross = net + tax
• From gross (tax inclusive): net = gross ÷ (1 + rate÷100); tax = gross − net

The inclusive formula is the one people most often get wrong: you do not subtract rate% of the gross as if it were exclusive.

Worked example

At a 20% rate, a £100 net price has £20 tax and £120 gross. Starting from a £120 gross figure at 20%: net = 120 ÷ 1.20 = £100, tax = £20. Subtracting 20% of 120 (£24) would be incorrect for tax-inclusive reverse maths.

Rates and exemptions

Countries and product categories use different rates (standard, reduced, zero-rated, exempt). Enter the rate that applies to your line item. This tool does not look up live statutory rates or decide whether an item is taxable.

Common mistakes

• Removing tax from a gross price by multiplying by (1 − rate/100) instead of dividing by (1 + rate/100).
• Applying one rate when a basket mixes reduced and standard items.
• Confusing VAT registration thresholds with the tax rate itself.

FAQs

Is sales tax always the same as VAT?

Mechanics are similar (a percent of a taxable base), but filing and invoice rules differ by country. The arithmetic here is the shared part.

Can I combine this with a discount?

Yes — decide whether your jurisdiction discounts before or after tax, then apply Discount and this calculator in that order.

Full guide: Percentages, discounts, and VAT

Related: Discount, Percentage, Unit Price.