VAT Formula – How to Calculate Value Added Tax

Value Added Tax (VAT) is a consumption tax applied at each stage of production and distribution. The standard VAT formula calculates either the tax amount or the total price including tax, depending on whether you start with the net (ex-VAT) price or the gross (inc-VAT) price. VAT rates vary significantly by country — from 5% in Canada (GST) to 27% in Hungary. This page covers all three essential VAT calculations: adding VAT, removing VAT, and finding the VAT rate from two prices.