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How to remove VAT from a gross price

2026-05-10 12:30 · VAT and Tax

Convert a VAT-inclusive price back to its net amount with a simple formula.

When a price already includes VAT, you may need to remove the tax to understand the net amount. This is common in reporting, pricing review, and cross-border ecommerce.

The basic formula is straightforward: divide the gross price by 1 plus the VAT rate. If the VAT rate is 20 percent, you divide by 1.2. The difference between the gross price and the result is the VAT amount.

This matters because the wrong base can distort your margins. A product may look profitable in gross terms but be weaker once VAT is removed.

Use the VAT calculator when you need a fast check without doing the math by hand. It is especially helpful when comparing prices across countries with different tax rules.

Always label whether a price is gross or net when sharing it internally or with customers.

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