VAT is charged on almost every sale of goods and services in more than 170 countries, and it is quoted two ways: a business-to-business price is usually on net terms, while the price a consumer sees already has the tax inside it.
VAT at 20%
$240.00
$1,200.00 net plus $240.00 of VAT is $1,440.00 gross
| Direction | Net | VAT | Gross |
|---|---|---|---|
| Net figure you entered | $1,200.00 | $240.00 | $1,440.00 |
| Net to gross (add VAT) | $1,200.00 | $240.00 | $1,440.00 |
| Gross to net (remove VAT) | $1,200.00 | $240.00 | $1,440.00 |
The two directions return the same three numbers, so a quote on net terms and a shelf price on gross terms describe the same money only when the gross figures match.
| Rate | VAT | Gross |
|---|---|---|
| 5% | $60.00 | $1,260.00 |
| 7% | $84.00 | $1,284.00 |
| 9% | $108.00 | $1,308.00 |
| 10% | $120.00 | $1,320.00 |
| 12% | $144.00 | $1,344.00 |
| 17% | $204.00 | $1,404.00 |
| 19% | $228.00 | $1,428.00 |
| 20% | $240.00 | $1,440.00 |
| 21% | $252.00 | $1,452.00 |
| 22% | $264.00 | $1,464.00 |
| 23% | $276.00 | $1,476.00 |
| 24% | $288.00 | $1,488.00 |
| 25% | $300.00 | $1,500.00 |
| 27% | $324.00 | $1,524.00 |
EU standard rates run from 17% (Luxembourg) to 27% (Hungary), with most countries between 19% and 25%. Reduced rates apply to specific goods and services.
This calculator moves between those two views in both directions, shows the VAT as a share of the price a customer actually pays, and works out the margin scheme used by dealers in second-hand goods.
VAT = net x rate / 100, and the gross price is the net plus that VAT. A $1,200 net invoice at 20% carries $240 of VAT and comes to $1,440.
If you are registered for VAT and can reclaim input tax, the net figure is the one that matters to your margins. The tax you charge is collected on behalf of the tax authority, not earned.
When the tax is already inside the price, the net amount is gross / (1 + rate / 100). At 20%, $1,440 gross is $1,200 net and $240 of VAT. The shortcut of subtracting 20% of $1,440 would give $288, which is wrong.
The VAT inside a gross price is always a smaller share of that price than the headline rate: 20% of the net is only 16.67% of the gross. That difference is the usual reason a VAT figure looks lower than expected.
Each country sets its own rate. In the European Union the standard rate cannot be below 15%, and the actual range runs from 17% in Luxembourg to 27% in Hungary, with most members between 19% and 25%.
Reduced rates apply to specific categories such as food, books, medicine, children clothing and some transport. The same company can charge 20% on one invoice line and 5% on another, which is why VAT is calculated per line rather than per invoice.
Dealers in second-hand goods, art and antiques can charge VAT on the margin instead of the full selling price. If a camera is bought for $900 and sold for $1,200 including tax, the taxable amount is the $300 margin, so the VAT is $50 at 20% rather than $200.
Businesses using the scheme cannot show the VAT separately on the invoice and cannot reclaim VAT on the purchase, which is the trade-off that makes it worthwhile only for goods bought from private sellers.
Each example below was run through the calculator on this page when the site was built, so the numbers match what you see when you enter the same inputs.
VAT at 20%
$240.00
$1,200.00 net plus $240.00 of VAT is $1,440.00 gross
A business customer sees $1,200 plus $240 of VAT; the $240 is collected on behalf of the tax authority rather than earned.
VAT inside this price
$10.41
$49.58 net plus $10.41 of VAT is $59.99 gross
The tax inside the price is $10.41, which is 17.4% of what the customer pays even though the rate is 21%.
VAT at 20%
$240.00
$1,200.00 net plus $240.00 of VAT is $1,440.00 gross
VAT on the margin is $50 instead of $200 on the full price, which is what makes dealing in second-hand goods viable.
Divide by the rate factor: gross / (1 + rate / 100). At 20%, divide by 1.2. Subtracting 20% from the gross figure instead would overstate the tax, because VAT is a percentage of the net price rather than the gross one.
At a 20% rate the VAT is one sixth of the gross price, or 16.67%. The higher the rate, the closer the VAT share gets to the headline rate, but it is always lower because the tax is charged on the smaller net amount.
Standard rates must be at least 15% and currently range from 17% in Luxembourg to 27% in Hungary. Most member states sit between 19% and 25%, and reduced rates of at least 5% apply to specific categories of goods and services.
A scheme for dealers in second-hand goods, art and antiques where VAT is charged on the margin rather than the full selling price. The invoice cannot show the VAT separately and the dealer cannot reclaim VAT on the purchase.
VAT is collected at each stage of production and businesses reclaim the input tax, so the final consumer effectively pays the tax once. Sales tax is charged a single time, at the final retail sale, and businesses do not reclaim it.
Only if you are VAT-registered and the purchase was used for your business. Consumers never reclaim it, and some categories, such as cars or business entertainment, are blocked or restricted in many countries.
Last reviewed 2026-09-14. This page is an estimate tool, not financial, tax or legal advice.Read the full disclaimer.