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 cross-border context, see the GST vs VAT (Australia vs UK) comparison, and the finance tools hub.