What is VAT and how does it differ from sales tax?

VAT (Value Added Tax) is a consumption tax collected at each stage of the supply chain, with businesses able to reclaim VAT paid on their inputs. Sales tax, used in the US, is only collected once at the point of final sale to the consumer. Both ultimately tax end consumers, but VAT provides a self-policing mechanism since each business in the chain has an incentive to report accurately.

Which country has the highest VAT rate?

Among major economies, the Scandinavian countries have some of the highest standard VAT rates: Sweden, Norway and Denmark all charge 25% VAT. Hungary has the highest VAT rate in the world at 27%. Most EU countries have rates between 17% and 27%, while countries like Japan (10%), Singapore (9%) and the UAE (5%) have significantly lower rates.

How do I calculate VAT from a VAT-inclusive price?

To extract VAT from a VAT-inclusive price, divide the total by (1 + VAT rate) to get the pre-VAT amount, then subtract. For example, with UK VAT at 20%: a £120 inclusive price divided by 1.20 gives £100 pre-VAT, and £120 - £100 = £20 VAT. Alternatively, multiply the inclusive price by the VAT rate / (1 + VAT rate).

Does the US have VAT?

No, the United States does not have a federal VAT. Instead, most US states charge a sales tax that varies by state and locality, typically ranging from 0% to over 10%. Unlike VAT, US sales tax is only charged once at the point of final sale and is not included in listed prices.

VAT Calculator

Add or remove VAT/GST for any country with pre-filled rates for 18+ countries worldwide.

Amount

Country

Mode

VAT Rate

20%

Total (incl. VAT)

VAT Amount

Pre-VAT Amount

Understanding Value Added Tax (VAT)

Value Added Tax (VAT) is a consumption tax applied to goods and services at each stage of the supply chain. Unlike a simple sales tax collected only at the point of sale, VAT is collected incrementally by each business involved in producing and distributing a product. Businesses can claim credits for VAT they pay on inputs, so the tax ultimately falls on the final consumer. Over 160 countries use some form of VAT or GST.

VAT Rates Around the World

VAT rates vary widely between countries. The Scandinavian countries (Sweden, Norway, Denmark) have the highest standard rates at 25%, while the UAE charges just 5%. Most European Union member states have rates between 17% and 27%. Some countries call their consumption tax GST (Goods and Services Tax) instead of VAT, including Australia (10%), India (18%), Singapore (9%) and Canada (5%), but the principle is similar.

How to Use This Calculator

Select your country to automatically apply the correct VAT or GST rate. Choose "Add VAT" to calculate the tax-inclusive price from a net amount, or "Remove VAT" to extract the VAT from a gross price. The calculator shows the VAT component, the pre-VAT amount and the total for quick reference on invoices, quotes and receipts.

Keep in mind that many countries have reduced rates for specific categories such as food, books or medical supplies. The rates shown here are standard rates. Check your local tax authority for category-specific rates.

Formula

Add VAT:

VAT Amount = Net Price × (VAT Rate / 100)
Gross Price = Net Price + VAT Amount

Remove VAT:

Net Price = Gross Price / (1 + VAT Rate / 100)
VAT Amount = Gross Price − Net Price

Where:

Net Price = price before VAT
Gross Price = price including VAT
VAT Rate = standard rate for the selected country (e.g., 20% UK, 19% Germany)

Example Calculation

Scenario: A product costs £200 before UK VAT (20%)

Step 1: VAT = £200 × 20/100 = £40
Step 2: Gross price = £200 + £40 = £240
To reverse: Net = £240 / 1.20 = £200, VAT = £240 − £200 = £40
Result: Customer pays £240 (£40 VAT included)

This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for decisions specific to your situation.