How the VAT formula works
Value Added Tax is a consumption tax applied as a percentage of the net selling price. When you calculate VAT online, you are applying one of two formulas depending on whether you start from a tax-exclusive or tax-inclusive amount.
Adding VAT: VAT amount = Net × (Rate ÷ 100). Gross = Net + VAT, which simplifies to Gross = Net × (1 + Rate/100). At the UK standard rate of 20%, every £1 of net value adds £0.20 of VAT.
Removing VAT (reverse calculation): Net = Gross ÷ (1 + Rate/100). VAT = Gross − Net. This is what people mean by a VAT reverse charge calculator in everyday use — working backwards from an inclusive price to isolate the tax. (Legal reverse-charge rules are separate: in some B2B scenarios the customer accounts for VAT instead of the supplier charging it.)
The same mathematics powers GST and sales-tax tools. Choose your country rate — UK 20%, Germany 19%, Australia 10% GST, India 18% GST, UAE 5% — enter the amount, and the calculator returns net, tax, and gross with consistent two-decimal rounding so net + tax always equals gross.
After you verify the numbers, use InvoBuzz’s free invoice generator to create a professional invoice with the correct VAT or GST line items, PDF download, and email delivery — no credit card required.