If you have a final price that already includes VAT and you want to know the original net amount, you need to calculate VAT backwards.
This is a common problem for freelancers, small businesses, ecommerce sellers, and anyone checking invoices. The good news is that the logic is simple once you know the formula.
If you want the fastest route, you can use our VAT Calculator to do this instantly. But it helps to understand the math too.
The quick answer
To remove VAT from a final price, use this formula:
net price = gross price ÷ (1 + VAT rate)
Then calculate the VAT amount like this:
VAT amount = gross price - net price
Example at 20% VAT
If the final price is €120 and VAT is 20%:
- net price =
120 ÷ 1.20 = 100 - VAT amount =
120 - 100 = 20
So:
- gross price: €120
- net price: €100
- VAT amount: €20
Why you cannot just subtract 20%
This is where people get tripped up.
If a price already includes VAT, you cannot simply subtract 20% from the final price. That would understate the original net amount because the VAT was calculated on the net price first.
- wrong shortcut:
€120 - 20% = €96 - correct reverse VAT answer:
€120 ÷ 1.20 = €100
That difference matters if you are pricing products, reviewing invoices, or separating tax from revenue.
Reverse VAT formula step by step
1) Turn the VAT rate into a multiplier
- 20% VAT →
1.20 - 21% VAT →
1.21 - 23% VAT →
1.23
2) Divide the final price by that multiplier
That gives you the net amount before VAT.
3) Subtract the net amount from the gross amount
That gives you the VAT amount included in the total.
Worked examples
Example 1: €121 including 21% VAT
- net price =
121 ÷ 1.21 = 100 - VAT amount =
121 - 100 = 21
Example 2: €246 including 23% VAT
- net price =
246 ÷ 1.23 = 200 - VAT amount =
246 - 200 = 46
Example 3: £72 including 20% VAT
- net price =
72 ÷ 1.20 = 60 - VAT amount =
72 - 60 = 12
When reverse VAT is useful
You may need to calculate VAT backwards when you want to:
- check whether a supplier invoice is correct
- separate tax from turnover in your records
- compare VAT-inclusive prices with net quotes
- understand how much tax is included in a marketplace total
- review historical sales or margin figures more accurately
VAT-inclusive vs VAT-exclusive pricing
- VAT-exclusive price = the amount before tax
- VAT-inclusive price = the final amount after VAT
This distinction matters because reverse VAT only makes sense when you are starting from a VAT-inclusive final total. If you want the broader context, read VAT Inclusive vs VAT Exclusive Pricing Explained.
Use the calculator instead of doing it manually every time
Manual VAT math is fine for one example, but it gets annoying fast when you are checking multiple figures or switching between tax rates.
Our VAT Calculator lets you:
- add VAT to a net price
- remove VAT from a VAT-inclusive total
- see the gross amount, net amount, and VAT amount instantly
It is especially handy for quick invoice checks, product pricing, and freelance quoting.
FAQ
What is the formula to remove VAT from a price?
Divide the VAT-inclusive price by 1 + VAT rate. That gives you the net amount before tax.
How do I find the VAT amount only?
First calculate the net amount. Then subtract it from the gross total.
Can I use this method with decimal rates?
Yes. The same logic works with decimal rates such as 7.5% or 15.75%.
Is reverse VAT the same as just subtracting the percentage?
No. If the VAT is already included in the final price, you need to divide by the VAT multiplier, not simply subtract the percentage.