How the calculation works
To add tax, multiply the net amount by the rate: net × rate = tax, then add it to get the gross. To remove tax from a price that already includes it, divide by one plus the rate: gross ÷ (1 + rate) = net. Taking 20% off a gross price is a common mistake: £120 includes £20 of VAT, not £24.
Which rate applies?
Most sales use the standard rate. Reduced and zero rates cover specific goods and services, such as food, books, medicines or accommodation, and the lists differ by country. Exempt and out-of-scope supplies carry no VAT at all, and selling across borders can shift where VAT is due. The country guides explain the details.
Rounding
The calculator rounds to the cent once, on the total for the amount you enter. On an invoice with several lines, tax authorities generally accept rounding per line or per rate total, but be consistent.