The general formula for calculating the Value Added Tax is the base cost of an item multiplied by the appropriate VAT rate for the item, as detailed by HM Revenue & Customs. To calculate the VAT of an item when the VAT is already included in the price, divide the total price of the item by 100 percent plus the applicable rate of the VAT.
Know MoreFor example, if an item costs $100 plus a VAT rate of 20 percent, the VAT calculation is $100 x 0.20 = $20, as shown by HM Revenue & Customs. The total cost of the item, including both the base price and the VAT, is found by adding the two together. For an item that costs $100 with a 20 percent VAT, the final price is calculated as $100 + $20 = $120.
To find the VAT from an item that has a total cost of $105, including a VAT taxed at a rate of 5 percent, the proper calculation is $105/1.05 = $100 to find the value of the item. From there, the VAT can be found by subtraction, as in the formula $105 - $100 = $5. When the VAT is included in the price, the price is considered VAT-inclusive. When VAT is not included, the price is VAT-exclusive, according to HM Revenue & Customs.
Learn more in TaxesA business owner can find his or her VAT number on the VAT registration certificate. The effective date of VAT registration and when to make the first VAT return payment is also listed on the certificate.
Full Answer >According to the European Commission, it is possible to get VAT numbers from each European Union country's tax database. The EU's VAT Information Exchange System, or VIES, also aggregates VAT data from the individual countries' databases and can confirm the validity of an individual VAT number.
Full Answer >The general formula for an inversely proportional relationship is y = k/x, where k is the constant of proportionality and x is an independent variable. In an inversely proportional relationship, the value of y decreases as x increases or increases as x decreases.
Full Answer >The general formula for direct variation is k equals y divided by x. In this formula, k is a constant quantity and x and y are variables. K is also called the constant of variation, because it stays the same even as x and y vary.
Full Answer >