A frequently made VAT calculation mistake by merchants is to apply 20% VAT on the total price, rather than the base price. For instance, for a €100 item, some sellers will calculate €20 of VAT, thinking the calculation is 20% of €100 = €20. The error often occurs when trying to calculate VAT from a total price that already includes it, leading to incorrect VAT amounts and prices.
Here's a link with an online calculator for the french VAT : https://www.tva.fr/
Hello ! Are you looking to understand how VAT (value-added tax) is calculated in France? Then you've come to the right place! We're going to try and make this rather daunting subject as easy to understand as possible. So hang on, here we go!
First of all, it's important to know that there are different VAT rates in France. Depending on the type of product or service, you could be subject to a standard rate of 20%, a reduced rate of 10%, a super-reduced rate of 5.5% or a special rate of 2.1%.
To calculate VAT, you can use the following formula:
VAT amount = Price before tax x VAT rate
For example, if you sell a product for €100 excluding VAT at a standard VAT rate of 20%, you can calculate the VAT amount as follows:
100€ (Price before tax) x 20% (VAT rate) = 20€ (VAT amount) for a total paid of 120€.
It's that simple!
If you want to calculate the price including VAT (Toutes Taxes Comprises), simply add the VAT amount to the price excluding VAT. In our example above, the price incl. VAT would be 120€ (100€ excl. VAT + 20€ VAT).
But what happens if you have the price including VAT and you want to find the price excluding VAT and the VAT amount? No problem, you can use the following formulas:
Price excl. VAT = Price incl. VAT / (1 + VAT rate)
VAT amount = Price incl. VAT - Price excl.
For example, if you have a product costing €120 inc. VAT, with a VAT rate of 20%, here's how you can calculate the price excluding VAT and the VAT amount:
Price excl. VAT = €120 / (1 + 20%) = €100
VAT amount = €120 - €100 = €20
Now you're a pro at calculating VAT! Remember, if you have any further questions, please don't hesitate to contact us. We're always here to help.