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The most common VAT mistake costs businesses money: subtracting the percentage directly from an inclusive price instead of dividing. Here is the correct method.
The Formula
Add: Price × (1 + rate÷100) | Remove: Inclusive Price ÷ (1 + rate÷100)
Standard formula used by professionals worldwide
Worked Example
Step-by-step
Price 1000 + 20% VAT = 1200 | 1200 including 20% → 1200÷1.20 = 1000
Key Concepts
- Accuracy: Results are as accurate as the inputs you provide
- Units: Always use consistent units throughout your calculation
- Verification: Double-check important calculations before making decisions
- Professional advice: For major financial, health, or structural decisions, consult a qualified professional
Privacy and Security
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- No data is sent to any server
- No sign-up or personal information required
- Your data stays private — always
Frequently Asked Questions
Why not just subtract percentage?
VAT is on ex-VAT price. 120 − 20% = 96, not 100. Always divide.
VAT vs sales tax?
VAT collected at every stage. Sales tax only at final sale.
Can businesses reclaim VAT?
Yes — VAT-registered businesses reclaim input VAT on purchases.