VAT, sales tax, GST: same math, very different rules
The formula is trivial — VAT = net × rate, gross = net × (1 + rate). The interesting questions are which rate applies, who pays it, who collects it, and what happens at borders. The calculator above does the arithmetic for 50+ countries. This note explains why the same “sales tax” produces very different invoices depending on where you are sitting when you read it.
VAT (Europe, UK, much of the world) is multi-stage
A VAT-registered business charges output VAT on its sales and reclaims input VAT on its purchases. Only the difference goes to the government; the end consumer pays the full amount on the final invoice. This is why the rate looks the same throughout the supply chain but the actual tax burden falls only on the consumer. France 20%, UK 20%, Germany 19%, Spain 21%, Belgium 21% — standard rates, with reduced rates for food, books, transport and similar essentials.
U.S. sales tax is single-stage and state-administered
There is no federal VAT in the United States. Sales tax is charged once, at the final sale to the consumer, by the state and often additionally by the county or city. The buyer pays it, the seller collects it. Rates stack: California state 7.25% + local 0.5–3.25% = effective 7.25–10.5%. New Hampshire, Oregon, Montana, Delaware, Alaska have no state sales tax at all. TaxJar tracks roughly 13 000 distinct sales-tax jurisdictions in the U.S.
Canada is a hybrid: GST + provincial sales tax
Federal GST 5%, plus provincial sales tax (PST) or a combined Harmonized Sales Tax (HST) in some provinces. Ontario charges 13% HST (5+8). Quebec charges 5% GST + 9.975% QST. Alberta has only the 5% GST. The calculator above uses combined rates where applicable.
Reverse calculation matters more than people realise
Given a gross price (the price tag), the net (pre-tax) amount is gross ÷ (1 + rate), and the tax embedded is gross − net. Many invoicing mistakes come from adding 20% to a gross price instead of correctly extracting it. On a €120 inclusive total at 20% VAT: net = €100, VAT = €20. Naively computing €120 × 20% = €24 over-states the tax by €4 — a 20% error.
Cross-border and digital services: the rules change
B2C digital services sold to EU consumers must charge the consumer’s local VAT rate (the OSS scheme replaced MOSS in 2021). B2B cross-border within the EU usually applies the reverse charge mechanism — the seller invoices net, the buyer accounts for VAT in their own jurisdiction. Importing physical goods into the EU since 2021 means VAT is owed regardless of value (the €22 low-value relief was abolished). For e-commerce especially, the calculator above is the easy part; jurisdictional rules are the actual complexity.
Takeaway: The calculator on this page does the arithmetic accurately for the headline rate of 50+ countries. Use it for quoting, invoicing checks and quick conversions. For anything legally binding — cross-border sales, B2B reverse charge, digital services, U.S. multi-jurisdiction nexus — the calculator is the starting point, not the answer. The actual rate that applies depends on who buys, where they are, what they bought, and whether the seller has nexus there.
Sources: European Commission VAT rates · UK HMRC VAT rates · Canada GST/HST rates.