How to Calculate VAT Rate

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Value added tax is easy to calculate.
Value added tax is easy to calculate. (Image: mehrwertsteuererhöhung_2 image by Angie Lingnau from Fotolia.com)

Value added tax, or VAT, is a national sales tax like that used in Europe and parts of Asia. While each country has different regulations, the VAT is lowest on raw materials, higher on sub-assemblies and highest on the finished product, even though the rate stays the same. If you're the consumer, calculating the VAT may take no more than a calculator.

Prepare to travel by asking your travel coordinator, travel agent or credit card company what percentage of a sale price is charged for VAT at your destination. VAT may apply to both goods and services in some locales, rather than to goods alone.

Divide the "percent" figure by 100. If the VAT is 20 percent, for example, divide 20 by 100. The result, 0.2, is the decimal equivalent of the VAT percentage.

Use your calculator to multiply the price of the goods by the decimal equivalent of the VAT percentage. The answer is the total VAT. Add this to the price of the goods to determine how much you will be charged for the goods.

Tips & Warnings

  • Nonresidents typically can receive a refund of VAT. If you purchase goods subject to VAT, just before your departure from a country, ask the officials in the last public customs facility you pass through--usually at an airport, preparatory to boarding your departing flight--for a refund. You'll need your receipts and, since the process may be time consuming, you should arrive well before your flight is due to leave.
  • Some countries have a variable VAT that fluctuates depending on the type of goods purchased.

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