Taxes and tax regulations often give entrepreneurs headaches, especially when it comes to entrepreneurship. Whether it’s income tax, trade tax, church tax, or VAT. Here is an article explaining how VAT is calculated based on German VAT rates.
MariaLast Updated on 9 November 2022
VAT calculator from gross to net
VAT is rarely advantageous to employees, but it is certainly advantageous to entrepreneurs, since the tax can be refunded on business purchases. Because he must pay only one price, he is often faced with the question of how high the actual net price is of a product or service.
There are various online VAT calculators available for calculating net amounts from gross prices and vice versa. The prices can be easily converted by entering one of the two values and the VAT rate of 7 or 19%. The following formulas are used to calculate the desired results.
How to calculate VAT?
Calculate included VAT of 19%: Gross price / 1.19 * 0.19 = Included VAT
Calculate included VAT of 7%: Gross price / 1.07 * 0.07 = Included tax
Price without 19% VAT: Gross price / 1.19 = Net price (Without VAT)
Price without 7% VAT: Gross price / 1.07 = Net price (without VAT)
Calculate price with 19% VAT: Net price * 1.19 = Gross price (without VAT)
Calculate price with 7% VAT: Net price * 1.07 = Gross price (without VAT)
VAT – easy explained
The value added tax (VAT) is easy to explain: It is added to each product you purchase as a consumer. In this example, if the entrepreneur sells a product for 100,- EUR, the state adds 19% – making the final price 119,- EUR. This price is the gross price, while the 100,- EUR is the net price. Here you find a comprehensive article on VAT in Europe and all VAT rates in different countries in the EU.
If the purchase of the goods is a business expense of an entrepreneur, he can have the VAT refunded as VAT, so that in the end he only pays the net price. Instead, the seller pays the 19% to the state. In this case he is, so to speak, only an intermediate host who collects the VAT from the buyer and finally passes it on to the state.
VAT rate of 19% or 7%
As discussed previously, VAT in Germany is usually 19%. For some products, such as our basic food a reduced VAT rate of only 7% applies. In these cases, an increase of only 7% is added to the net price. In addition to the essential foods, books are also taxed at 7%.
Calculating VAT is a simple three-step process. Those who want it even simpler, can use on-line value added tax calculators and see so quickly how much gross revenue, how much net revenue, and how much net gross income they generate. Entrepreneurs, above all, learn how soon their operational purchases will cost them.
Would you like to get a consultation in order to get a better understanding of your tax situation and your obligations? Reach out to our dedicated sales team and find out which of our services might be helpful for you!