Take 20% VAT off a price
Divide the VAT-inclusive total by 1.2, or take one sixth of it as the VAT. 120 including VAT at 20% is 100 before VAT and 20 of VAT. Subtracting 20% from 120 gives 96, which is 4 short, because the 20% was charged on the smaller number in the first place. The shortcut tax authorities publish is the VAT fraction: the rate divided by 100 plus the rate, which at 20% is 20/120, or one sixth.
Line by line
| Line 1 | $10.82 | $2.17 | $12.99 |
| Line 2 | $3.74 | $0.75 | $4.49 |
| Line 3 | $26.25 | $5.25 | $31.50 |
| Line 4 | $7.29 | $1.46 | $8.75 |
| Total | $48.10 | $9.63 | $57.73 |
An estimate, not legal advice. Rules vary by jurisdiction and change over time. Check the current position with a qualified professional before relying on it.
Subtracting 20% from a gross price understates the price before VAT by 4% of itself, which is 3.33% of the total on the receipt.
The VAT fraction at 20% is one sixth, so a 59.99 receipt contains 10.00 of VAT and 49.99 of goods.
The VAT is rounded and the net is then the total minus it, so the two always add back to the price actually charged.
How it works
The formula
Adding VAT to a price that excludes it:
vat = round(net x rate / 100)
gross = net + vat
Removing VAT from a price that includes it, by the VAT fraction:
vat = round(gross x rate / (100 + rate))
net = gross - vat
where
rate = the rate as a percentage, so 20 rather than 0.2
round = to the nearest 0.01, or towards zero when
"round the VAT down" is chosen
At 20% the VAT fraction is 20/120, which is one sixth.
Only the VAT is rounded. The third figure is derived from
the other two, so net + vat = gross to the penny, always.
Down a pasted column, each line is rounded and the totals
are the sums of the rounded lines — never the rounding of
the summed lines, which is a different number.
What it assumes
- The rate is whatever you type. This tool holds no rate table for any country, which is the reason nothing on this page can go out of date and the reason it cannot tell you which rate applies to your supply.
- Rounding is applied to the VAT, and the third figure is derived from the other two. Rounding all three independently would leave them a penny apart whenever both halves fall on a half-penny, which is how an invoice ends up not adding to its own total.
- The currency is presentational and no exchange rate is applied anywhere. VAT arithmetic is the same in pounds, euros or dollars, so the tool follows whichever currency your locale uses rather than pinning one — which is why the worked examples below quote bare figures. A symbol written into the prose would contradict the result panel for every reader outside one country.
- In the price list, a comma is removed as a grouping separator and never read as a decimal point. A pasted "1,234" is one thousand two hundred and thirty-four here. Deciding this from your locale instead would make the same list total two different ways on two machines.
- Which rounding rule is correct is a rule of the tax authority you file with, not a preference. Both options are offered because this page belongs to no country and is in no position to choose one for you.
Common questions
What is the VAT fraction, and why is it 1/6?
It is the share of a VAT-inclusive price that is tax. At 20% the gross is 120% of the net, so the VAT is 20/120 = 1/6 of the gross. At 5% it is 5/105 = 1/21. Authorities publish these fractions precisely so the arithmetic can be done on the gross without working backwards.
Which figure goes on an invoice?
All of them, on a full VAT invoice: the net, the rate and the VAT amount, with the gross as the total. A simplified invoice below the threshold may show the gross and the rate alone. Rounding is done per line rather than on the total, which is the usual source of a penny’s disagreement.
Sources
Method written and checked by Tessalor on Jul 31, 2026.
The full method, worked example and every assumption behind this figure are on VAT Calculator.