What is VAT?
VAT (value-added tax) is a consumption tax charged at each stage of production, common across Europe and 170+ countries. Businesses charge VAT on sales, reclaim VAT on purchases, and remit the difference — so the tax ultimately lands on the end consumer. Rates are set nationally (e.g., 20% standard in the UK).
In practice
A UK consultant invoices £5,000 + 20% VAT = £6,000. She reclaims the £400 VAT she paid on her laptop, remitting the net to HMRC.
Add or strip VAT instantly
Billia's free VAT calculator handles both directions — add VAT or back it out.
Open the VAT calculatorFrequently asked questions
Do I charge VAT as a freelancer?
If your revenue exceeds your country's registration threshold, you must register and charge it. Below the threshold, registration is usually optional.
What's the difference between VAT and sales tax?
VAT is collected in stages with input credits; sales tax is collected once at the final sale. Both land on the end consumer.
Should I show VAT on my invoice?
Yes — as its own line with the rate, plus your VAT number. Many countries legally require both on business invoices.