Adding VAT to a price is easy: multiply by the rate and add it on. Taking VAT out of a price that already includes it looks like the same sum backwards, and that is where the mistake happens. If a receipt says 1,100,000 dong including 10% VAT, the VAT is not 10% of 1,100,000. It is 100,000, which is 10/110 of the price. Taking 10% gives 110,000 and overstates the tax by 10,000. This article shows why, gives the correct formula for any rate, and covers the rounding questions that come up on real invoices. Every number here was produced with the VAT calculator, which uses exact integer arithmetic.
Adding VAT: multiply
A rate applies to the price without VAT, the net price. So adding VAT is:
VAT = net × rate
gross = net + VAT = net × (1 + rate)At 10%, a net price of 1,000,000 has 100,000 of VAT and a gross price of 1,100,000. At 19%, a net price of 19.99 has 3.7981 of VAT, rounded to 3.80, so the gross is 23.79.
Removing VAT: divide
When you start from the gross price, you know gross = net × (1 + rate), so you get back to the net price by dividing:
net = gross ÷ (1 + rate)
VAT = gross − net = gross × rate ÷ (1 + rate)That last fraction is the useful one. The share of a gross price that is VAT is the rate divided by 100 plus the rate:
| Rate | VAT share of the gross price | As a percentage |
|---|---|---|
| 5% | 5/105 | 4.76% |
| 8% | 8/108 | 7.41% |
| 10% | 10/110 | 9.09% |
| 19% | 19/119 | 15.97% |
| 20% | 20/120 = 1/6 | 16.67% |
| 27% | 27/127 | 21.26% |
Worked through:
- 1,100,000 at 10%: net 1,100,000 ÷ 1.10 = 1,000,000, VAT 100,000. Taking 10% of the gross would give 110,000.
- 1,080,000 at 8%: net 1,000,000, VAT 80,000. The naive 8% of the gross is 86,400.
- 120.00 at 20%: net 100.00, VAT 20.00. The naive 20% of the gross is 24.00, too much by 4.00, which is 20% of the VAT itself.
- 1,270,000 at 27% (the Hungarian standard rate): net 1,000,000, VAT 270,000; 27% of the gross would be 342,900.
The error from the shortcut is always the rate applied to the VAT: at 10% the overstatement is 10% of the real VAT, at 20% it is 20%. It grows with the rate, which is why the mistake is small enough to slip through on a 5% item and obvious on a 20% one.
Why the percentages are not symmetric
A percentage is always "of" something. VAT is 10% of the net price, so it is a smaller share of the larger gross price. The same thing happens with discounts: if a price goes up 10% and then down 10%, you do not get back to where you started, because the second 10% is taken from a bigger number. The percentage calculator shows this with any numbers you like.
Rounding: once on the total, or line by line
Money has a smallest unit (a cent, or a dong for VND), so every VAT figure ends up rounded. The calculator rounds half up, once:
- when adding, it rounds the VAT and makes gross = net + VAT;
- when removing, it rounds the net and makes VAT = gross − net.
That way the three numbers always add up. For example, 99.99 including 20% VAT is 83.325 net, rounded to 83.33, which leaves 16.66 of VAT. And 50,000 dong including 8% is 46,296.30 net, rounded to 46,296, which leaves 3,704 of VAT.
Invoices often round per line instead. Three lines at 33.33 net with 20% VAT get 6.67 of VAT each, 20.01 in total, while 20% of the 99.99 total is 20.00. Neither is wrong; they are two rounding conventions, and the difference is at most a unit or two per invoice. If your accounting system and the calculator disagree by a cent, check which convention the system uses before looking for a bigger mistake.
Common mistakes
- Taking the rate off the gross price. The 10/110 trap above. Divide by 1.10 instead.
- Changing the rate on a gross price by the difference. When Vietnam's rate moved from 10% to 8% for many goods, a price of 1,100,000 including 10% does not become 1,100,000 × 0.98 = 1,078,000. The net price stays 1,000,000, and at 8% the gross is 1,080,000.
- Applying the rate to a price that already includes VAT. Adding 10% to 1,100,000 gives 1,210,000, VAT charged twice.
- Mixing net and gross in one sheet. Label each column "excl. VAT" or "incl. VAT"; most errors start with a column whose meaning nobody remembers.
- Using a reduced rate that has expired or does not cover your product. See below.
The rates in the presets (as of 13 October 2026)
Vietnam. The standard rate is 10%, a 5% rate applies to listed essential goods and services, and exports are 0%. Resolution 204/2025/QH15 and Decree 174/2025/ND-CP cut the 10% rate to 8% for many goods and services from 1 July 2025 to 31 December 2026. Listed sectors are excluded, including telecommunications, finance, banking, insurance, securities, real estate, metal and mining products and goods subject to special consumption tax; the decree's appendices list them. If you price for 2027, check whether the reduction has been extended.
United Kingdom. 20% standard, 5% reduced (domestic energy, for example) and 0% for some goods.
EU examples. Germany 19%, France 20%, Ireland 23% and Hungary 27%, the highest standard rate in the EU. Every member state also has reduced rates for some goods.
These rates come from public summaries checked on the date above. For an invoice or a tax return, confirm the rate with the tax authority or your accountant.
Using the calculator
Open the VAT calculator, choose Add VAT or Remove VAT, type the price, and pick a preset or type any rate up to four decimals. Pick a currency for the right symbol and decimals. When you remove VAT it also shows the naive figure and how far off it is, which is a quick way to audit a spreadsheet. If you work with Vietnamese salaries rather than prices, the salary calculator and the article on gross to net salary in 2026 do the same step-by-step job for payroll.