How to Calculate VAT (Formulas & Explanations)
Value Added Tax (VAT) is a consumption tax assessed on the value added to goods and services. Calculating VAT accurately ensures your invoices comply with HMRC and international tax authority rules.
1. Adding VAT Formula (Net to Gross)
When you have a base price and need to add 20% VAT:
Gross Total = Net Price + VAT Amount (or Net Price × 1.20)
Example: For a £500 freelance service with 20% VAT: £500 × 0.20 = £100 VAT. Gross Total = £600.
2. Removing VAT Formula (Gross to Net / Reverse VAT)
When an item costs £120 including VAT, many people mistakenly calculate 20% of £120 (£24) and subtract it. That is incorrect! The 20% was applied to the original net price, not the gross total.
VAT Amount = Gross Price - Net Price
Correct Example: To remove 20% VAT from £120: £120 ÷ 1.20 = £100 Net. VAT Amount = £20 (which is 20% of £100).
Current European & International VAT / GST Rates (2026)
| Country | Tax Name | Standard Rate | Reduced Rate |
|---|---|---|---|
| United Kingdom (UK) | VAT | 20% | 5% / 0% |
| Germany | MwSt | 19% | 7% |
| France | TVA | 20% | 10% / 5.5% |
| Australia | GST | 10% | 0% |
Frequently Asked Questions
Can I generate a full tax invoice after calculating VAT?
Yes. Simply click the purple "Create Invoice with these Totals" button above. QuickBillFree pre-loads your calculated tax figures directly into a professional PDF bill ready to download or print.
Does this calculator store my data?
No. QuickBillFree runs 100% in your local web browser. None of your calculations or business numbers are ever uploaded to cloud servers.