VAT Calculator

What a VAT calculator does, in both directions

VAT sits on top of a price. The price before it is the taxable amount: the net; the price with it is the gross, and the VAT is the difference. Given any one of the three and a rate, the other two follow, and a VAT calculator is just those two formulas with the arithmetic done for you.

The two directions are not symmetrical, and this is where money goes missing. Forwards, you multiply: €100 at 22% gives €122. Backwards, you divide: €122 at 22% gives €100. Subtracting 22% from €122 gives €95.16, and the €4.84 difference is not a rounding artefact: it is a percentage taken from the wrong base. The surcharge was computed on 100 and you removed it from 122.

How to use it, step by step

• Pick the direction Add VAT if the figure you have is net, Remove VAT if it already includes the tax. Everything else follows from this choice.
• Amount the price you have in hand. In Remove VAT mode it is the gross: the number on the receipt or the total of the invoice.
• VAT rate % type the percentage as a number: 22, 10, 5, 4. Decimals are accepted for the rates that have them.
• Read all three lines the headline shows the VAT, with the taxable amount and the total underneath. For bookkeeping you need all three, because they are three different rows.
• Copy the result the copy button takes the figure out as text, ready for a spreadsheet cell or an invoice line.

The cases that cost real money

Rounding per line against rounding per invoice is a genuine difference, not a quibble. Ten lines each rounded to the cent and then summed can land a cent or two away from the same total rounded once at the end, and accounting software differs on which it does. If an invoice is off by a cent, this is almost always why, and the fix is to agree on one convention, not to adjust a figure by hand.

Multiple rates on one document cannot be run in one pass. A restaurant bill with food at 10% and alcohol at 22% has two taxable bases and two VAT amounts, and the total VAT is their sum. Calculate each rate separately and add the results; applying an average rate to the whole total gives a number that matches nothing.

And reverse charge means there is no VAT to compute. On a cross-border B2B supply inside the EU, the supplier invoices without VAT and the customer accounts for it in their own country. The invoice total equals the net: if you add 22% to it you have invented a tax nobody owes.

When the number comes out wrong

• The net is lower than it should be you subtracted the rate instead of dividing by it. From a gross figure, always divide by 1 + rate ÷ 100.
• The total is lower than the amount you typed you are in Remove VAT mode with a net figure. Switch to Add VAT; the mode decides how your number is read.
• “Values have to be greater than zero” the amount is zero, empty or negative. A credit note is handled as a positive amount with a minus sign in your books, not as a negative input here.
• A rate of 0 gives VAT of zero which is correct, and distinct from an exempt or out-of-scope supply. Zero-rated, exempt and non-taxable are three different statuses on a return, even when the VAT column reads nothing in all three.
• The cents disagree with your invoicing software rounding convention, almost certainly. Compare what each one rounds: every line, or only the final total.

The words on the invoice

• Taxable amount the price before VAT, also called the net or the base. It is what your revenue is measured on.
• VAT the tax itself, which you collect on behalf of the state and do not keep. It never belongs to the business.
• Gross taxable amount plus VAT: what the customer actually pays.
• Standard and reduced rates most EU countries run one standard rate and one or two reduced ones: in Italy 22% standard, with 10%, 5% and 4% on specific categories. The rate follows what is being sold, not who is selling it.
• Input and output VAT what you pay on purchases and what you charge on sales. You remit the difference, which is why VAT is neutral for a business and a cost only for the final consumer.