VAT is a tax (Value Added Tax) that’s added to the net price of most goods and services sold by businesses.
The net amount is the price charged before VAT is added – also known as the VAT exclusive amount because it excludes VAT.
The gross amount is the price charged after VAT is added – also known as the VAT inclusive amount because it includes VAT.
The VAT calculator can be used to add VAT to give the gross amount and it shows the amount of VAT added on.
The VAT calculator can also remove VAT from the gross amount to give the net amount and the amount of VAT removed.
VAT is calculated as a percentage of the net amount. The percentage is known as the VAT rate and is usually set by governments. For example, in the UK, the standard VAT rate is 20% – this means 20% is added to most goods and services sold by VAT-registered businesses.
A business becomes VAT-registered when it registers with the tax authority for VAT.
VAT-registered businesses can reclaim VAT they’ve paid to other businesses – this claim is made to the tax authority and known as a VAT refund.
Individuals can also claim VAT refunds. A VAT refund calculator is the same as removing VAT from a gross amount.