What is the current VAT rate in the UK?

UK VAT rates: Standard rate 20%, reduced rate 5% (home energy, children's car seats), zero rate 0% (food, books, children's clothing). Check HMRC for latest rates as they can change.

How do I calculate VAT from a gross amount?

To extract VAT from gross: VAT = Gross ÷ (1 + Rate) × Rate. For £120 including 20% VAT: £120 ÷ 1.20 × 0.20 = £20 VAT. Net = £100.

What are EU VAT rates?

EU minimum standard rate is 15%, but countries set their own: Germany 19%, France 20%, Italy 22%, Spain 21%. Some countries have reduced rates (10-15%) for specific goods and services.

Can I reclaim VAT on business expenses?

Yes, registered businesses can reclaim VAT on business purchases. Requirements vary by country—in the UK, you must be VAT registered and the expense must be for business use. Keep proper invoices with VAT numbers.

VAT Calculator — EU/UK Value Added Tax + Reverse VAT (2026)

Q: What's the difference between VAT and sales tax?

VAT is applied at each supply chain stage (production to retail), with each business collecting and remitting tax on value added. US sales tax is only applied at final consumer point. VAT is more common globally.

What is VAT (Value Added Tax)?

VAT (Value Added Tax) is a consumption tax placed on products and services at each stage of production where value is added. Unlike sales tax which is only paid by the end consumer, VAT is collected incrementally at each step of the supply chain. VAT rates vary by country: UK 20%, EU typically 19-27%, Canada 5-13%, while the US has no federal VAT. Understanding VAT is essential for international ecommerce sellers and businesses operating across borders.

How to Calculate VAT

Calculating VAT requires knowing the net amount and applicable rate:

Enter your Amount ($) - the net price before VAT
Enter your VAT Rate (%) - the applicable tax rate for your region
Results instantly show VAT amount and gross total
Use for pricing, invoicing, or tax compliance

VAT Formulas

VAT Amount = Net Amount × VAT Rate

Gross Amount = Net Amount + VAT Amount = Net Amount × (1 + VAT Rate)

Net Amount = Gross Amount ÷ (1 + VAT Rate)

Real-World Example

Example: A UK business sells software for £1,000 net, subject to 20% VAT:

VAT Amount: £1,000 × 20% = £200

Gross Amount: £1,000 + £200 = £1,200

To reverse-calculate: £1,200 ÷ 1.20 = £1,000 net

Why VAT Matters

Understanding VAT helps you:

Price internationally - Factor VAT into cross-border pricing
Stay compliant - Accurate VAT calculation prevents penalties
Invoice correctly - Proper tax breakdown on all invoices
Plan cash flow - VAT collected must often be remitted to authorities

Frequently Asked Questions

What are VAT rates by country?

Standard rates: UK 20%, Germany 19%, France 20%, Italy 22%, Spain 21%, Australia 10%, Canada GST 5% + PST 6-10%, Japan 10%. Many countries have reduced rates for essentials like food and healthcare.

What's the difference between VAT and sales tax?

VAT is collected at every stage of production (from raw materials to retail), with each business claiming credits for VAT paid. Sales tax is only collected by the final retailer from the end consumer. Most countries use VAT; the US uses sales tax.

Do I need to charge VAT for international sales?

If selling digital products to consumers in the EU/UK, you may need to register for VAT in those regions if your sales exceed thresholds (EU: €10,000, UK: £0 for digital services). Physical goods follow different rules based on where they're shipped from/to.

How do I register for VAT?

In the UK, register through HMRC (free for voluntary registration under £85,000). In the EU, register through your local tax authority or use the OSS scheme for multi-country sales. Consider hiring an accountant for complex international situations.

Can I claim back VAT paid?

Businesses can generally reclaim VAT on business purchases. Each country has rules about input tax credits. If VAT paid exceeds VAT collected, you may receive a refund from the tax authority.

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