Net Amount (Tax free value) = Gross Amount (Tax inclusive value) ÷ (1 + Tax%)

Calculate the Net Amount (Without Tax) Backwards.

• Gross Amount = Net Amount + Tax Amount
• Tax Amount = Tax% × Net Amount
• Gross Amount = Net Amount + Tax% × Net Amount = (1 + Tax%) × Net Amount
• In conclusion:

  Gross Amount = (1 + Tax%) × Net Amount ... if we know the Net Amount

  Net Amount = Gross Amount ÷ (1 + Tax%) ... if we know the Gross Amount

Examples of calculations:

• If VAT was 20%, (1 + Tax%) = 1 + 20% = ¹⁰⁰/₁₀₀ + ²⁰/₁₀₀ = ¹²⁰/₁₀₀ = 1.2 => Gross Amount = 1.2 × Net Amount, and Net Amount = Gross Amount ÷ 1.2;
• If VAT was 9%, (1 + TVA%) = 1 + 9% = ¹⁰⁰/₁₀₀ + ⁹/₁₀₀ = ¹⁰⁹/₁₀₀ = 1.09 => Gross Amount = 1.09 × Net Amount, and Net Amount = Gross Amount ÷ 1.09;
• If tax rate was 5%, (1 + Tax%) = 1 + 5% = ¹⁰⁰/₁₀₀ + ⁵/₁₀₀ = ¹⁰⁵/₁₀₀ = 1.05 => Gross Amount = 1.05 × Net Amount, and Net Amount = Gross Amount ÷ 1.05;

VAT (Value Added Tax)

VAT is a tax charged of each economic agent involved in the business cycle of manufacturing of a product or providing a service within the scope of taxation. VAT, charged by the operators, is transferred to the state budget.

Value-added tax (VAT) is charged as a percentage of the value added at every level of production of a good. For example, a cider maker would pay a percentage of the difference between of what they charge for cider and what they pay for apples. Put differently; this is a tax on company's gross margins, rather than just the end user.

There are standard VAT rates in effect, for example the standard VAT rate could be 20%, and some reduced rates could be 10% and 5% respectively, but they depend on each country.