VAT (value-added tax) is a consumption tax collected in stages. For operators, the recurring question is not “what is 20%?” but whether a figure is net or gross, and whether you should add VAT or strip it out for a quote. Getting that direction wrong silently shifts margin.
Add VAT vs remove VAT (algebra)
If net = N and VAT rate = v (as decimal, e.g. 20% → 0.20), gross G = N × (1 + v). If you only know gross and need net, N = G / (1 + v) and VAT portion is G − N. Those two lines power most VAT calculator apps, including ours — the rest is UX and rounding policy.
Reference rates (verify before filing)
| Region | Typical headline VAT | Notes |
|---|---|---|
| United Kingdom | 20% standard (reduced/zero categories exist) | B2B reverse charge on certain cross-border services. |
| European Union | Varies by member state (often 17–27% standard bands) | OSS/IOSS and digital goods rules add complexity beyond a toy calculator. |
| United Arab Emirates | 5% federal VAT (exemptions apply) | Design zones and specific supplies may differ. |
When you model a proposal, pick the rate that matches your customer jurisdiction and invoice type, then document it beside the number. For deeper SMB context, see our VAT guide for small businesses and the finance tools hub.