Working out VAT is simple arithmetic once you know the rate — the confusing part is that the rate itself, and even the concept, changes depending on which country you're invoicing in.
The Basic Formula
To add VAT: Price × (1 + VAT rate) = Total. To extract VAT already included in a price: Total ÷ (1 + VAT rate) × VAT rate = VAT amount.
Worked Examples by Region
| Region | Typical Rate | $100 + Tax |
|---|---|---|
| United Kingdom (VAT) | 20% | $120.00 |
| Germany (VAT) | 19% | $119.00 |
| France (VAT) | 20% | $120.00 |
| United States (Sales Tax, varies by state) | ~0–9.5% | $100–$109.50 |
Rates shift periodically and US sales tax varies by state and even city — always confirm the current local rate before invoicing.
Why the US Is Different
The US has no federal VAT at all. Instead, individual states (and sometimes cities) charge sales tax, only on the final sale to the end consumer — not at every stage of production like VAT. Some states (Oregon, Montana, New Hampshire, Delaware) charge no sales tax at all.
Free VAT Calculator — Try It, Then Go Pro
A free calculator handles the math for any rate instantly — enter the price and rate, get the total. For freelancers invoicing across multiple countries regularly, the Pro version tracks VAT collected across all your invoices automatically.
Frequently Asked Questions
Is VAT the same as sales tax?
No — VAT is charged at each stage of production and reclaimed by businesses along the way; sales tax is charged once, at the final sale to the consumer.
Do freelancers need to charge VAT to US clients?
Generally no — VAT typically applies based on where the seller (or in some digital cases, the buyer) is located, and cross-border rules vary, so checking your specific situation matters.
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