Sometimes the number you have is the final, VAT-inclusive price, and what's needed is the breakdown — how much of that total was actually VAT. This is the reverse of the usual "add VAT" calculation.
The Formula
VAT Amount = Gross Price ÷ (1 + VAT Rate) × VAT Rate. Net Price = Gross Price − VAT Amount.
Worked Example
A $600 total, UK VAT at 20%: $600 ÷ 1.20 = $500 net price. $600 − $500 = $100 was VAT.
The same $600 total, if it were a 19% German VAT-inclusive price: $600 ÷ 1.19 = $504.20 net, meaning $95.80 was VAT.
Why This Trips People Up
A common mistake is simply multiplying the total by the VAT rate directly ($600 × 20% = $120), which overstates the VAT amount — the correct method divides by 1 plus the rate first, since the rate applies to the net price, not the gross total.
Free VAT Calculator — Try It, Then Go Pro
A free calculator with a dedicated "extract VAT" mode does this correctly every time, without needing to remember which formula applies to which direction. The Pro version applies this across a full batch of receipts or invoices at once, useful for expense reporting.
Frequently Asked Questions
When would someone need to extract VAT instead of adding it?
Most commonly when reviewing expense receipts to reclaim VAT paid, since receipts typically show only the final, tax-inclusive price.
Does this calculation work the same for US sales tax?
The same math applies, but since sales tax isn't reclaimed by businesses the way VAT is, the practical need to extract it comes up far less often.
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