Money & FinanceSeptember 5, 20263 min read
How do you calculate a price with and without VAT?
Add VAT or take it out: see the net, VAT and gross amounts together.
VAT is a tax added on top of the net price. Going from the price without VAT to the price with VAT you multiply; going back you divide.
The formula
Gross = Net × (1 + Rate ÷ 100) Net = Gross ÷ (1 + Rate ÷ 100)
At 20% VAT a net price of 1,000 becomes 1,200. To go back, 1,200 ÷ 1.20 = 1,000, so the VAT is 200.
A common mistake
Taking 20% off the gross price is wrong: 1,200 × 0.80 = 960. VAT is charged on the net price, so you have to divide by 1.20.