How to Calculate VAT Percentage
A compact guide to calculating VAT percentage from net or gross prices, with formulas, examples, and quick checks.
The two useful VAT formulas
You can calculate VAT percentage in two common ways depending on what numbers you already have.
VAT percentage = (VAT amount / net price) * 100
Gross price = net price + VAT amount
How to calculate VAT percentage
- Find the VAT amount.
- Divide it by the net price before tax.
- Multiply by 100.
Example 1
A product costs 100 before VAT and 120 after VAT.
- VAT amount = 120 - 100 = 20
- 20 / 100 = 0.20
- 0.20 * 100 = 20%
The VAT percentage is 20%.
Example 2
A service costs 80 before VAT and 96 after VAT.
- VAT amount = 96 - 80 = 16
- 16 / 80 = 0.20
- VAT percentage = 20%
How to add VAT to a net price
Multiply the net price by the VAT rate, then add the VAT amount.
VAT amount = (net price * VAT percentage) / 100
If the net price is 150 and VAT is 20%, the VAT amount is 30 and the gross price is 180.
Quick rule
Always use the net price as the base when calculating VAT percentage. If you divide by the gross price, the answer will be wrong.
Common mistakes
- Dividing the VAT amount by the gross price instead of the net price
- Mixing up VAT amount and total price
- Forgetting that different countries may use different VAT rates
Related percentage calculations
If you need a general percentage tool, use the percentage calculator.
You may also want to review discount percentage and percentage share when comparing tax, pricing, and margin calculations.
FAQ
Is VAT calculated on the net price or gross price?
VAT is normally calculated on the net price. The gross price is the final amount after VAT is added.
Can I work backward from a gross price?
Yes, but you need to separate the VAT amount first or use the reverse VAT formula for the specific rate.
Is VAT the same as sales tax?
No. They are different tax systems, even though both add tax to a price.