VAT Inclusive vs Exclusive Prices Explained
Learn how to add VAT to a price and correctly extract VAT from a tax-inclusive total.
Adding VAT
Multiply the exclusive price by (1 + VAT percentage / 100). For an exclusive price of 100 and VAT of 20%, the inclusive price is 120.
Removing VAT
Divide an inclusive price by (1 + VAT percentage / 100). A total of 120 at 20% VAT contains 20 VAT and a base of 100.
Why not subtract 20% from the total?
Subtracting 20% of 120 gives 96, which is incorrect because VAT is measured against the exclusive price, not the inclusive total.
Worked example
For a tax-inclusive price of €240 at an illustrative 20% VAT rate, the exclusive price is €200 and VAT is €40.
Check the applicable VAT rules
Rates, zero-rating, exemptions, product classifications and jurisdiction-specific rules differ. The calculator performs arithmetic using your supplied rate; it is not a current VAT-rate database.
Try your own numbers
Use the interactive calculator to compare scenarios. The results are estimates based on your chosen inputs.
Related calculators: Sales Tax Calculator · Discount Calculator
Educational information only. Check applicable rules, rates and product terms; this guide is not individualized financial, tax, employment or legal advice.