💰 Finance · Updated October 11, 2026 · 8 min read

Remove VAT From a Price: Divide, Don't Subtract

£120 inc VAT £100 net 💶

To remove VAT from a price, divide the gross amount by 1 plus the rate: with UK VAT at 20%, £120 ÷ 1.20 = £100 net, so the tax is £20. Subtracting 20% of £120 gives £96, which is wrong, because the 20% was charged on the net figure, not on the total. The same rule works for every EU rate; only the divisor changes.

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Sales Tax & VAT Calculator in Remove tax mode for UK VAT at 20%: £120 total paid splits into £100.00 before tax and £20.00 VAT
Remove tax mode: £120 including 20% VAT is £100 net.
💡 Why the subtraction shortcut costs real money

UK and EU consumer prices include VAT, so freelancers, small businesses checking supplier invoices and US buyers comparing prices all have to work backwards. Taking the percentage off the total understates the net every time: on a £1,200 laptop the error is £40, and across a year of purchase invoices it distorts bookkeeping and VAT returns. The US works the other way round: shelf prices usually exclude sales tax, which is added at the register and generally collected once, on the final retail sale. VAT is charged at every stage of the supply chain, and registered businesses reclaim what they paid on purchases.

The formula to remove VAT, and the tax fraction

Net = gross ÷ (1 + rate ÷ 100). Tax = gross − net. Check it in reverse: net × (1 + rate) should give back the gross.

The fraction explains why subtracting fails: a 20% rate is only 16.67% of the gross, 19% is about 15.97% of it, and 25% is exactly one fifth.

Worked examples at common EU standard rates

These are standard rates at the time of writing, matching the calculator's presets. Rates change, so confirm the current figure with the national tax authority before relying on it.

Reduced rates, mixed receipts and rounding

Many goods carry a reduced or zero rate. At the time of writing, most basic food, books and children's clothes are zero-rated in the UK; Germany applies 7% to most food and books; France uses 5.5% and 10% bands. One receipt can therefore mix rates, and each group must be divided by its own divisor.

Rounding can move a cent. Three lines of €9.99 at 19%: rounding each line gives €8.39 net and €1.60 tax per line, so €25.17 and €4.80 in total. Working on the €29.97 total gives €25.18 and €4.79. Which method an invoice may use depends on local rules, so follow your tax authority or accountant.

Using the calculator, and checking B2B invoices

GrabCast's Sales Tax & VAT Calculator runs in your browser. Pick Remove tax, choose a country under European Union standard VAT or United Kingdom VAT (rate and currency fill in), and type the total paid. It shows the net, the tax included and the formula it used. For a mixed receipt, run each group separately and type the reduced rate as a custom rate.

Find the rate takes a net and a gross amount and returns the percentage charged, which quickly catches a supplier invoice that used the wrong band. On a business invoice, also check:

When and why you need to reverse VAT

Reverse calculations come up when you only have the VAT-inclusive total: a receipt, a retail price, or a quote from a supplier. Businesses that reclaim input VAT, freelancers preparing invoices and shoppers comparing prices across countries all need the net figure.

For a US approach, calculating sales tax with a reverse formula explains the equivalent steps, and calculating a percentage refreshes the underlying arithmetic.

Rounding rules and common mistakes

Round the VAT to the nearest cent or penny and make the net the remainder, so that net plus tax equals the gross exactly. On multi-line invoices, rules differ between calculating per line and on the total, so follow your tax authority's guidance. The usual error is subtracting the percentage from the gross; the correct approach always divides by one plus the rate.

Step-by-step

1234
1Find the rate — Check which VAT rate applied: standard, reduced or zero, and in which country.
Remove tax tab selected with United Kingdom — VAT · 20% chosen as the location and GBP as the currency
Pick Remove tax and the country, so the 20% rate fills in.
2Divide the gross — Divide the VAT-inclusive total by 1 plus the rate, for example by 1.20 for 20% or 1.19 for 19%; split mixed receipts by rate first.
Tax rate % filled in as 20 and Total paid (tax included) set to 120
Type the VAT-inclusive total you paid.
3Get the VAT — Subtract the net from the gross to find the VAT amount, and round to the cent.
Remove-tax result: £100.00 price before tax, £20.00 tax included (20%), £120.00 total paid, and a note that taking 20% off would give £96.00
Net price and the VAT inside the total, plus the formula.
4Check it — Multiply the net by 1 plus the rate; you should land on the original gross.
Add tax check with UK VAT: a £100.00 price plus £20.00 tax (20%) gives a £120.00 total
Check it: add 20% back to the net and you land on the gross.

Common mistakes to avoid

⚠️Subtracting the VAT percentage from the gross, which understates the net every time.
⚠️Using the standard rate on groceries, books or other goods taxed at a reduced or zero rate.
⚠️Treating a reverse-charge B2B invoice as if VAT were included in its total.
⚠️Relying on a remembered rate instead of the official current one.

Pro tips

✓Memorize the fraction for your rate: one sixth at 20%, about 15.97% at 19%, one fifth at 25%.
✓Keep net, VAT and gross in separate spreadsheet columns, with one row per rate band.
✓Tell UK and EU clients whether quotes are ex VAT or inc VAT, in writing.
✓Share exact numbers with the calculator's link.
✓On foreign receipts, strip the tax first, then convert the net amount to your currency.

Frequently asked questions

How do I remove 20% VAT from a price?

Divide by 1.20. £240 ÷ 1.20 = £200 net, so the VAT is £40. Taking 20% off £240 would wrongly give £192.

What is the VAT fraction?

It is the share of a VAT-inclusive total that is tax: rate ÷ (100 + rate). At 20% it is 1/6; at 19% it is 19/119.

How do I remove 19% German VAT?

Divide by 1.19. €119 ÷ 1.19 = €100 net and €19 VAT. For food at the 7% reduced rate, divide by 1.07 instead.

Is VAT the same as US sales tax?

No. VAT is included in consumer prices and charged at each stage of the supply chain, with businesses reclaiming it. US sales tax is usually added at checkout on the final sale, and its rate stacks state and local taxes.

Can I get VAT back as a tourist?

Many EU countries refund VAT to non-EU visitors on eligible goods, usually with a minimum spend and a customs stamp. Rules vary by country, so check official guidance before you shop.

📌 Bottom line

Removing VAT is division, not subtraction: gross ÷ (1 + rate). Split mixed receipts by rate, check the current rate with the tax authority, round to the cent and multiply back to confirm. This is not tax advice; for VAT returns, ask your accountant.

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