MarginSimple

VAT margin calculator

Enter your selling price, whether it includes VAT, the VAT rate and your cost. You get the margin you actually keep.

$

As shown to customers

Shop prices to consumers usually include it

%

Standard rate for your country

$

VAT you can reclaim isn't a cost

Real margin –
Profit per unit
–
VAT in the price
–

Fill in the boxes and press Calculate.

VAT isn't revenue

When a customer pays a price that includes VAT, part of that money was never yours. You collect it and pass it on. Leave it in, and your margin looks several points better than it really is, which is how prices end up set too low.

price before VAT = price with VAT ÷ (1 + VAT rate)
margin = (price before VAT − cost) ÷ price before VAT × 100

Example

A shop in Poland sells a lamp for 123 zł including 23% VAT. The lamp cost 60 zł before VAT, which the shop reclaims.

The price before VAT is 123 ÷ 1.23 = 100 zł. VAT is 23 zł. Profit is 100 − 60 = 40 zł, so the real margin is 40%. Counting the whole 123 zł as revenue would suggest a 51% margin, eleven points that don't exist.

Common standard rates

CountryStandard VATDivide shelf price by
Germany19%1.19
United Kingdom20%1.20
France20%1.20
Spain21%1.21
Netherlands21%1.21
Italy22%1.22
Poland23%1.23

Rates change from time to time and reduced rates apply to some products, so confirm the rate for what you sell.

Prices without VAT

If you sell to businesses and quote prices before VAT, switch the second box to "excludes VAT". The margin works the same way; the calculator just adds VAT on top to show what the customer pays.

Questions

Do I calculate margin on the price with or without VAT?

Without. The VAT you collect is passed on to the tax office, so it's never your revenue. Margin is profit divided by the price before VAT.

How do I take VAT out of a price?

Divide by 1 plus the rate. At 23% VAT, a 123 price is 123 ÷ 1.23 = 100 before VAT, and 23 is VAT.

Should my cost include VAT?

If you're VAT-registered and can reclaim the VAT on your purchases, use the cost without VAT. If you can't reclaim it, for example under a small-business exemption, the VAT you paid is a real cost, so include it.

Which VAT rate should I use?

Your country's rate for the product you sell. Standard rates in the EU range from 17% to 27%, and many countries have reduced rates for food, books or medicine. Check with your tax office or accountant if you're unsure.

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