How to Calculate Net From Gross VAT

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The VAT, an abbreviation for Value Added Tax, is a tax you may encounter on purchases if you travel abroad. The VAT is not in effect in the United States, but is in many parts of Europe. Similar to a sales tax, VAT is a percentage of the sale price that is added to a purchase. The gross VAT price is the price of the item with the VAT included. The net is the price without the VAT. Travelers can be eligible for VAT refunds when they depart the country, so it's handy to be able to calculate VAT you have paid based on gross purchase price.

Things You'll Need

  • Calculator
  • VAT percentage amount for transaction
  • Check your receipt to find the gross amount of the purchase.

  • Add one to the VAT percentage rate. For example, if the VAT is 20 percent, adding 1 yields 1.20.

  • Divide the gross purchase price by the figure in Step 2. For example, if you bought a coat in London, and your gross price was 192 pounds, using the example above (192 divided by 1.20) yields a net purchase price of 160 pounds, leaving 32 pounds VAT.

References

  • Photo Credit Aaron Graubart/Stockbyte/Getty Images
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