VAT Calculator Guide: How Value Added Tax Works Globally
VAT (Value Added Tax) is the world's most common form of consumption tax, used in over 160 countries. Unlike GST (India's variant) or US sales tax, VAT is collected at every stage of production — but only the final consumer bears the full cost.
VAT Rates Around the World
| Country | Standard VAT | Reduced Rate |
|---|---|---|
| UK | 20% | 5% (energy, children's car seats), 0% (food, books) |
| Germany | 19% | 7% (food, books, public transport) |
| France | 20% | 5.5% (food), 2.5% (medicines) |
| Australia (GST) | 10% | 0% (fresh food, health) |
| UAE (VAT) | 5% | 0% (healthcare, education) |
| Canada (GST/HST) | 5–15% | Varies by province |
| Singapore (GST) | 9% | 0% (essential goods) |
How to Add VAT to a Price
VAT Amount = Net Price × (VAT Rate / 100) Gross Price = Net Price + VAT Amount
Example (UK, 20%): £500 + VAT = £500 × 1.20 = £600
How to Remove VAT from a Gross Price
Net Price = Gross Price / (1 + VAT Rate / 100) VAT Amount = Gross Price - Net Price
Example: You paid £600 including 20% VAT.
Net = £600 / 1.20 = £500 VAT = £100
VAT Refunds for Businesses (Input Tax Credit)
VAT-registered businesses don't bear the VAT cost permanently. They charge VAT on sales (output VAT) and reclaim VAT paid on business purchases (input VAT). Only the net amount goes to the government. This is why B2B invoices always show VAT separately — your client will reclaim it.
Tourist VAT Refunds
Many countries allow non-resident visitors to claim a VAT refund on goods purchased and taken out of the country. In the UK, the tourist refund scheme ended post-Brexit for retail purchases. In the EU, minimum purchase thresholds apply (e.g., €175 in France). Get a VAT refund form from the retailer and present it at the airport customs desk.
Try our free VAT Calculator — no sign-up needed.
Frequently Asked Questions
What is the difference between VAT and GST?
Both are consumption taxes collected at multiple stages of production. GST is the term used in India, Australia, Canada, and Singapore; VAT is used in the UK, EU, and UAE. They function the same way — only the name differs.
How do I remove VAT from a price?
Divide the gross (VAT-inclusive) price by (1 + VAT rate/100). For UK 20% VAT: £600 ÷ 1.20 = £500 net. The VAT is £100.
Do businesses pay VAT?
VAT-registered businesses collect VAT from customers (output VAT) and reclaim VAT paid on business purchases (input VAT). They remit the difference to the government, so effectively only end consumers bear the VAT cost.
Can tourists get a VAT refund?
Yes, in many countries. Non-residents buying goods and taking them out of the country can claim a VAT refund. Requirements vary: minimum purchase amounts, official forms, and customs stamps at departure are typically needed.