VAT Calculator

Value Added Tax (VAT) is a consumption tax added to the price of goods and services at each stage of production and distribution. It's the most common form of sales tax used globally — over 160 countries use VAT. VAT vs. Sales Tax: VAT is collected at every stage of the supply chain (manufacturer → wholesaler → retailer), while US-style sales tax is only collected at the final sale. The end consumer pays the same effective amount, but VAT distributes collection across the chain. Standard VAT rates by region: EU countries typically range from 17–27% (Hungary 27%, Luxembourg 17%). UK: 20%. Australia (GST): 10%. Canada (GST): 5%. Most countries also have reduced rates for essential goods like food and medicines. Exclusive vs. inclusive: Prices 'excluding VAT' show the base price — VAT is added on top. Prices 'including VAT' already contain the tax. To extract VAT from an inclusive price: VAT = Price ÷ (1 + rate) × rate. For businesses: VAT-registered businesses collect VAT from customers but can reclaim VAT paid on their own purchases (input tax). Only the net amount is paid to the government.