How to remove VAT from a VAT-inclusive price
To get the net price from a VAT-inclusive price, divide by 1 + the VAT rate. At 20%, $96 gross is $80 net with $16 VAT. Why VAT is 1/6 of a gross price at 20%, not 20%, with worked examples.
Net price = gross price ÷ (1 + VAT rate ÷ 100). At 20%: $96 ÷ 1.2 = $80 net, so VAT was $16. That’s one-sixth of the gross price, not 20% of it. Taking 20% off $96 would give $76.80, which is wrong.
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Receipts and retail prices often include VAT. To record an expense, reclaim VAT, or compare against a net quote, you need to take the VAT back out.
The formula
net price = gross price ÷ (1 + VAT rate ÷ 100)
Where gross price includes VAT
VAT = gross price − net price
Where or gross × rate ÷ (100 + rate)
Worked example at 20%
A receipt for $96.00 including 20% VAT:
- Multiplier: 1 + 20 ÷ 100 = 1.2.
- Net: $96 ÷ 1.2 = $80.00.
- VAT: $96 − $80 = $16.00.
Try it: Remove 20% VAT from $96
Open in calculator
Why taking 20% off is wrong
VAT was 20% of the net price. The gross is 120% of net. Taking 20% of the gross takes 20% of a larger number:
- 20% of $96 = $19.20, leaving $76.80 (wrong).
- Correct VAT: $16, leaving $80.
Multiply your answer back to check: $80 × 1.2 = $96. If the check doesn’t return the original gross, the method was wrong. The same logic applies to any reverse percentage.
A price that doesn’t divide evenly
A $129.99 item including 20% VAT: $129.99 ÷ 1.2 = $108.325, which rounds to $108.33. VAT is then $129.99 − $108.33 = $21.66.
Try it: Remove 20% VAT from $129.99
Open in calculatorGetting VAT by subtraction keeps net + VAT equal to the gross price, even after rounding.
Quick fractions
| VAT rate | Divide gross by | VAT share of gross |
|---|---|---|
| 5% | 1.05 | 1/21 (4.76%) |
| 10% | 1.10 | 1/11 (9.09%) |
| 20% | 1.20 | 1/6 (16.67%) |
| 25% | 1.25 | 1/5 (20%) |
At 20%, a quick check is “divide the gross by 6 to get the VAT”: $96 ÷ 6 = $16.
Mixed-rate receipts
If a receipt has items at different VAT rates, remove VAT from each rate group separately. Many receipts list a VAT summary by rate, which gives you the gross for each group.
For adding VAT, see how to calculate VAT. Sales tax works the same way: see removing sales tax from a total.
Questions
Is there a quick fraction for common VAT rates?
Yes. The VAT share of a gross price is rate ÷ (100 + rate). At 20% it’s 1/6, at 25% it’s 1/5, at 10% it’s 1/11, and at 5% it’s 1/21.
Why does my net price come out with a fraction of a cent?
Because the gross price was rounded when VAT was added. Round the net to the cent, then get VAT by subtracting the net from the gross, so the two still add up exactly.
The calculator links in this guide are checked against the PercentSwift calculator every time the site is built. How we calculate explains the rounding rules. If you spot a mistake, email hello@percentswift.com.
