Adding and removing VAT
When adding VAT to a net price, multiply the net amount by 1 plus the rate as a decimal. A net price of 100 at 20% VAT gives a gross price of 120, with 20 representing the VAT component. This is the standard calculation used when prices are quoted exclusive of tax and a gross selling price needs to be shown.
Removing VAT from a gross price works in reverse. A receipt showing 120 inclusive of 20% VAT means the net amount was 120 divided by 1.2, which equals 100, and the VAT element is 20. This is why a VAT calculator, GST calculator, or tax removal calculator is useful for invoicing, bookkeeping, and price checking across different markets.
Gross = Net x (1 + rate / 100)
Multiply the net (pre-tax) amount by one plus the VAT rate expressed as a decimal to get the gross (tax-inclusive) price.
Net = Gross / (1 + rate / 100)
Divide the gross (tax-inclusive) amount by one plus the VAT rate to extract the net (pre-tax) price.
VAT amount = Gross - Net
The tax element is simply the difference between the gross and net prices.