EU VAT guide
VAT inclusive vs exclusive
Use this guide when you know the price and need to decide whether VAT is already included or still needs to be added.
The difference
A VAT-exclusive amount is the net amount before VAT. A VAT-inclusive amount is the gross amount after VAT has been added.
For a 100.00 net sale at a 20% VAT rate, the VAT is 20.00 and the gross amount is 120.00. If 120.00 is already VAT-inclusive, the net amount is 100.00 and the VAT component is 20.00.
Formulas
- Add VAT: gross = net x (1 + VAT rate).
- Remove VAT: net = gross / (1 + VAT rate).
- VAT amount from gross: VAT = gross - gross / (1 + VAT rate).
- VAT amount from net: VAT = net x VAT rate.
Common mistakes
- Subtracting 20% from a VAT-inclusive 120.00 amount gives 96.00, not the correct 100.00 net amount.
- Using the seller country rate for a B2C cross-border EU sale when destination VAT rules or OSS may apply.
- Forgetting reduced rates, exemptions, marketplace rules, or reverse charge wording.
FAQ
Is VAT inclusive the same as gross?
Usually yes. VAT-inclusive means the amount includes VAT, so it is the gross price for VAT calculation purposes.
Can I use the standard VAT rate for every item?
No. Standard rates are only the default. Reduced rates, exemptions, and special rules can apply by country and product category.