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    Indirect tax / invoicing

    VAT and GST calculator

    Add VAT or GST to a net price, or strip it out of a tax-inclusive price correctly. The difference between dividing by (1 + r) and subtracting r is shown explicitly, because it is the most common invoicing error.

    DirectionAddingRate20.00%Rounding$240.00
    Net amount
    $1,200
    Excluding tax
    VAT amount
    $240.00
    At 20.00%
    Gross amount
    $1,440
    Including tax
    Tax share of gross
    16.67%
    What fraction of the invoice is tax
    Invoice breakdown
    Net, tax and gross for the amount entered, in both directions.
    Tax-exclusive input
    Invoice breakdown
    ComponentAmountWorking
    Net (excl. VAT)$1,200Entered amount
    VAT$240.00$1,200 × 0.2000
    Gross (incl. VAT)$1,440$1,200 × (1 + 0.2000)
    VAT as % of net20.00%The statutory rate
    VAT as % of gross16.67%The rate expressed on the inclusive base

    Adding VAT is a straight multiplication; only the removal direction needs the division.

    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    Net vs tax vs gross
    How the entered amount splits once the tax is separated.
    Net vs tax vs gross$0$340$680$1.0k$1.4k$1.7k$1.2kNetNet$240VATVAT$1.4kGrossGrossAmount
    Tax at other statutory rates
    The same net amount across common VAT and GST rates.
    Tax at other statutory rates$0$354$708$1.1k$1.4k$1.8k$60$1.3k5%5%$84$1.3k7%7%$120$1.3k10%10%$180$1.4k15%15%$240$1.4k20%20%$300$1.5k25%25%VAT amountGross
    Canonical equations
    The exact relationships implemented by this engine.

    G = N(1 + r), VAT = N·r · tax-exclusive input

    N = G / (1 + r), VAT = G − N · division, not subtraction

    r / (1 + r) · At 20.0% that is 16.67% of the gross

    N + VAT = G · always holds after rounding

    finance methodology

    A clear path from inputs to results.

    Adding VAT is a multiplication; removing it is a division. Subtracting the tax rate from a gross price is the most common invoicing error, and it understates the net by an amount that grows with the rate. This engine does both directions correctly and shows the size of the error.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Enter the amount you have.
    2. Tell the engine whether that amount already includes tax.
    3. Set the statutory rate — 20% UK VAT, 19% German VAT, 10% Australian GST, and so on.
    4. Read the net, tax and gross split.
    5. Check the reverse-direction row: it shows what the common subtraction method would have produced.
    6. Round the tax to the minor currency unit for the invoice.

    The formula

    Add: G=N(1+r), VAT=NrRemove: N=G1+r, VAT=G−N\text{Add: } G = N(1+r),\ \text{VAT} = Nr \qquad \text{Remove: } N = \frac{G}{1+r},\ \text{VAT} = G - N

    Reference: EU VAT Directive 2006/112/EC, Art. 73 (taxable amount inclusive of tax); national GST legislation follows the same algebra.

    Worked example

    20% VAT on a 1,200 invoice (default inputs)

    Inputs
    • Amount 1,200.
    • VAT rate 20%.
    • Amount excludes tax (adding direction).
    Calculation path
    1. 1

      VAT: 1,200 × 0.20 = 240.

    2. 2

      Gross: 1,200 + 240 = 1,440.

    3. 3

      Reverse direction: from a 1,200 gross, net = 1,200 / 1.20 = 1,000 and VAT = 200.

    4. 4

      Subtracting 20% of the gross would give 960 — a 40 understatement of the net.

    Result

    Net 1,200 · VAT 240 · gross 1,440. Removing VAT from 1,200 gross gives net 1,000, not 960.

    Interpreting the result

    At 20%, the tax is 16.67% of the gross, not 20%. That is why dividing by 1.2 is correct and multiplying by 0.8 is not. The error is 4% of the net at a 20% rate, and it scales roughly with the square of the rate — trivial at 5% GST, material at 27% Hungarian VAT.

    Assumptions & limitations

    • A single rate applies to the whole amount. Mixed-rate invoices need the calculation per line.
    • The rate is the statutory rate on the net amount; reduced rates and exemptions are not inferred.
    • Rounding is to two decimal places at the tax line, which is the usual invoicing convention.
    • No reverse-charge or intra-EU B2B treatment is modelled.
    • The amount is in one currency; no conversion is applied.

    Frequently asked questions

    Why can’t I just subtract the VAT rate from a gross price?

    Because the rate is defined on the net amount, not the gross. At 20%, tax is 20% of net but only 16.67% of gross. Subtracting 20% of the gross over-removes the tax and understates the net.

    How do I handle multiple rates on one invoice?

    Compute each line separately at its own rate, then sum the tax. Applying a blended rate to the total produces a different, wrong answer.

    Is the gross price always tax-inclusive?

    In consumer-facing markets, quoted prices are usually tax-inclusive by law. In B2B markets, quotes are usually net. The direction toggle exists because both conventions are common.

    What is the difference between VAT and sales tax?

    VAT is collected at each stage of the supply chain with input credits, so it is ultimately borne by the final consumer. US sales tax is collected once at the point of sale. The arithmetic for a single invoice is the same.

    Should I round the tax or the total?

    Round the tax to the minor unit and derive the gross from it. Most jurisdictions require the tax amount on the invoice to be a whole cent, and auditors reconcile to that figure.

    Does this work for GST?

    Yes. GST is structurally the same tax with different rates and thresholds. Enter the GST rate and use the same direction toggle.

    Methodology last reviewed 2026-10-18. Results are informational and not financial or engineering advice — see our disclaimer.