Value-added tax
Value-added tax is popular by the common economy- and trade-related short abbreviation VAT. This is the most basic consumption tax. VAT is paid to almost all commercial goods and services. The individual national legislation approach on taxation usually has its own determination on standard rate of VAT, depicted in percentages. It is a common principle for some sensitive goods and service types to obtain a different than the traditional VAT rate or reduced rate of VAT (drugs, books, postage stamps, home energy, fuel, children’s car seats, most food types, etc.). Value-added tax is a general tax that is added to a different stage of its current cycle to eventually be paid by the end user. Therefore, this is why it represents the classical indirect tax type. The obligation to charge VAT and transfer it to the state treasury, though, lies on the trader rather than on the end consumer.
How does VAT work?
VAT is levied on the gross margin at every stage of the supply chain, from manufacturing and distribution to sale. The tax is assessed and collected at each stage.
For example, let’s assume a cake is produced and sold in the imaginary country of Vatopia with a 10% VAT.
In that case, VAT works as follows:
- The manufacturer purchases raw materials for $4, plus a VAT of $0.40 payable to the government of Vatopia, for a total of $4.40.
- The manufacturer sells cake to a retailer for $10, plus a VAT of $1, for a total of $11. The manufacturer only pays Vatopia $0.60, which is the total VAT at that stage minus the prior VAT charged by the raw material supplier.
- The retailer then sells cake to consumers for $20, plus a VAT of $2, for a total of $22. The retailer pays Vatopia $1, which is the total VAT minus the previous VAT charged by the manufacturer.
VAT rate
The VAT rate is depicted in percentages. There’s an officially established rate for the majority of the commercial goods and services in a country, as well as different VAT rates for specific trade elements in the national economy. It is the country’s obligation to determine the specific state VAT system, but the membership in economy unions such as the European Union might predetermine concrete limits in which the state authorities are supposed to fit.
Please, be aware that with our expert VAT Calculator App you will receive national rates with updates in real time.
Our application database is focused on VAT rates within the following countries: Albania, Algeria, Andorra, Angola, Antigua and Barbuda, Argentina, Armenia, Aruba, Australia, Austria, Azerbaijan, Azores, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Belize, Benin, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Burkina Faso, Burundi, Cambodia, Cameroon, Canada, Cabo Verde, Central African Republic, Chile, China, Colombia, Cook Islands, DR Congo, Congo, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Eswatini, Fiji, Finland, France, Gabon, Germany, Georgia, Ghana, Greece, Guatemala, Guyana, Haiti, Hungary, Iceland, India, Indonesia, Iran, Ireland, Isle of Man, Israel, Italy, Jamaica, Japan, Jersey, Jordan, Kazakhstan, Kenya, Kosovo, South Korea, Kyrgyzstan, Lebanon, Liechtenstein, Lithuania, Luxembourg, Madeira, Malaysia, Maldives, Malta, Marshall Islands, Mauritius, Mexico, Moldova, Monaco, Mongolia, Montenegro, Morocco, Namibia, Nepal, Netherlands, New Zealand, Niger, Nigeria, Niue, North Macedonia, Norway, Oman, Pakistan, Palestine, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Puerto Rico, Romania, Russia, Rwanda, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Tajikistan, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, United Arab Emirates, United Kingdom, Uruguay, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe.
For example:
UK rates
| Type | Rate |
|---|---|
| Standard | 20% |
| Reduced | 5% |
| Zero | 0% |
Price excluding VAT
Trade prices are commonly divided into two groups – inclusive and exclusive. VAT inclusive is the price that includes the tax net value. Many countries display their standard prices with VAT inclusive prices. Unlike these, the VAT exclusive is the net price of goods or the price without adding VAT tax value. VAT exclusive stands for the price that is not a final price for the end consumer as tax is yet to come to be calculated and added in the invoice.
Calculate VAT
Calculating VAT value is not such a big deal. However, some calculations include different goods and service groups, while the dynamic changes in today’s international and national economies suppose quite frequent changes in the rate of VAT. Hence, there’s a classical formula to be used in all cases when trying to get the final value-added tax vat, also known as sales tax. Knowing the VAT rates is the key to calculate vat and understanding the value of the added tax in the final goods or service price. Thus, you will be eased to calculate the VAT amount in all financial transactions.
VAT Formula
Here’s the VAT formula: you should multiply the net amount by 1 and add the specific UK VAT percentage (meanwhile, you are supposed to multiply with 1.20 if the VAT is 20%). This is how you will receive the gross amount. Here’s another way to use the formula: multiply with VAT percentage if you need the concrete VAT value.
When you want to receive the excluding VAT net amount from the gross sum, follow this formula: divide the gross amount with 1 and add the VAT percentage (meanwhile, if the VAT is 20%, you must divide with 1.20). Proceed with subtracting the gross amount, then do not forget to multiply with -1. Last but not least, you need to round to the closest.
VAT calculator app
Does this VAT formula confuse you? Do you want to quickly subtract VAT amount without wasting time or sweating? Do you urgently need UK VAT or the rate of VAT for a specific good added tax? How about having a handy VAT calculator?
We mean an instant algorithm that will calculate VAT backwards, show you the net amount with price excluding the tax of specific goods and services. Calculating VAT is no longer a tough or complicated task!
What is a VAT Calculator?
We present you our VAT calculator app. The mobile application allows you to receive the easiest and most trustworthy way to calculate the tax rate, the price excluding VAT, the VAT inclusive, etc. Remove VAT from the net price or add VAT to the gross price to know how much you should pay at the end of your financial transactions for services and goods.
Benefits
Compatible with almost all Android and iPhone mobile phones and tablets, our VAT calculator is easy to be understood, helpful to be used in numerous daily and business hypotheses. This calculator is unique not only because it saves you time and nerves but also because it includes a constantly updating system with VAT rate amounts for numerous countries. Tired of coming upon VAT calculator offers for the UK and the Isle? In our VAT calculator, alongside the UK VAT rate, we include the current VAT rates for 150+ countries worldwide for your information.
Premium features
In case it’s legally required for you to perform lots of calculations for VAT registered services and goods, we’ve designed an efficient premium version of our VAT calculator. It includes numerous extras such as the following:
- No annoying ads to distract you from your urgent task to calculate the reduced rate of VAT, the value-added tax rate in any country from the European Economic Community and worldwide.
- A feature to easily add custom rate.
- Quick way to change the current country for the VAT calculator formula.
- Extended history for all the calculations of your financial transactions. This can be useful for HMRC Making Tax Digital compliance and Flat Rate Scheme.
- Updates on VAT rates – always in time and regarding all the regions in the European Union and worldwide.
