What is VAT?
Value Added Tax is a consumption tax applied at each stage of production, ultimately borne by the end consumer. Unlike US sales tax, VAT is typically baked into the displayed price in Europe — what you see on the shelf is what you pay. To extract the pre-VAT figure for accounting, expense reports, or B2B invoicing, you reverse the math the same way you would US sales tax: Pre-VAT = Total ÷ (1 + Rate ÷ 100).
Standard vs reduced rates
Every EU country has a standard VAT rate (the figures above) plus reduced rates for certain categories — typically food, books, pharmaceuticals, hotel stays, and public transport. Some countries also apply super-reduced rates near 5%. This calculator uses the standard rate; for reduced-rate items consult the country's VAT authority for the applicable percentage.
When US businesses need this tool
If you sell digital services or goods into the EU you must charge VAT at the customer's country rate (under OSS / IOSS schemes). When invoicing EU B2B customers with reverse-charge VAT, you list the pre-VAT price separately. When importing EU vendor invoices that show only a tax-inclusive total, this calculator gives you the figure to post to the expense account and the VAT line that may be reclaimable.
VAT vs sales tax — key differences
VAT is collected at every stage of the supply chain with reclaim mechanisms; US sales tax is collected only at the final retail sale. VAT rates are uniform within a country; US sales tax stacks state plus local. VAT is usually included in the displayed price; US sales tax is added at the register. The calculation, however, is identical — divide the inclusive total by 1 plus the rate.