VAT inclusive vs exclusive: which number to enter
Tax-inclusive (extract VAT from gross) vs tax-exclusive (add VAT to net). Same rate, different starting figure.
Exclusive: you know the net, you add rate. Gross = net × (1 + rate). Inclusive: you know the shelf price, you split it. Net = gross / (1 + rate).
A 20% example: net 100 exclusive → gross 120. Gross 120 inclusive → net 100, VAT 20. People mix the directions and then argue about a 4-unit gap that is just the wrong formula.
Invoices should state which figure is the base. The calculator does not know your jurisdiction. Rounding to cents can still differ from an ERP by a penny; match the system of record for filing.
Exclusive means the tax is added on top: 1000 plus 22% is 1220. Inclusive means the tax is already inside: 1220 contains 220, not 1220 plus another 22%. Reading a shop tag wrong is the usual mistake. The rate is the same; the base is not. This page is the wording. The converter opens on the inclusive, extract-from-gross case.
| Trait | Exclusive (add) | Inclusive (extract) |
|---|---|---|
| Starting figure | Net | Gross / shelf price |
| Formula | gross = net × (1 + rate) | net = gross / (1 + rate) |
| Typical ticket | B2B quotes | Consumer shelf price |
FAQ
Which for a shop price?
Usually inclusive if the ticket shows what the customer pays.
Is the rate baked in?
No. You enter it.