What this calculator does
VAT and sales tax calculations go wrong in two predictable ways: subtracting a percentage to remove tax, and applying a rate to an amount that already includes it. This calculator handles both directions correctly.
It never assumes a statutory rate. You supply the rate that applies to you, which keeps the tool useful across countries and tax regimes without pretending to give tax advice.
How the calculation works
When adding tax, the entered amount is treated as net. Tax is calculated as a percentage of that amount and added to produce the gross total.
When removing tax, the entered amount is treated as gross. The net amount is found by dividing by 1 plus the rate, and the tax is the difference between the gross and net figures.
Worked example: Removing 20% tax from 1,200
- 1Gross amount: 1,200.00
- 2Net amount: 1,200.00 ÷ 1.20 = 1,000.00
- 3Tax amount: 1,200.00 − 1,000.00 = 200.00
The net amount is 1,000.00 and the tax included is 200.00.
Common mistakes
- Removing tax by subtracting the rate from the gross amount. 1,200 minus 20% is 960, not the correct net of 1,000.
- Applying tax twice when an invoice total is already inclusive.
- Using another country's rate because a website said it was standard.
- Rounding the tax before multiplying, which can shift totals by a cent or more on large invoices.