How to remove VAT from a tax-inclusive price
Learn why removing VAT requires division, with clear net, tax, and gross examples.
By Yoravex · Updated October 20, 2026 · Educational guide
Start with net and gross
Net is the amount before VAT. Gross is the amount including VAT. The VAT rate is applied to the net amount, not the gross amount. The examples here use a hypothetical 20% rate to explain the arithmetic; they do not establish the rate applicable to your business or transaction.
Add VAT using multiplication
Multiply the net amount by the rate as a decimal to find tax. For a net price of 100 at 20%, VAT is 100 × 0.20 = 20. Add that to the net amount to get a gross price of 120. Equivalently, multiply the net amount by 1.20.
Remove VAT using division
To reverse the calculation, divide gross by one plus the decimal rate. For 120 including 20% VAT, net is 120 ÷ 1.20 = 100. Tax is the difference between gross and net, or 20. Simply subtracting 20% of 120 gives 96, because it applies the percentage to the wrong base.
Handle rounding consistently
The calculator uses full precision internally and formats monetary results to two decimals. Actual invoices may require rounding by line or at invoice level, and some currencies use different minor units. Small differences can appear when many rounded line items are added. Follow your applicable accounting rules.
Confirm the rules separately
A calculator cannot decide whether a transaction is taxable, exempt, zero-rated, subject to reverse charge, or eligible for recovery. Check the relevant tax authority or accountant for the correct treatment. Enter the rate yourself once it has been confirmed.
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