VAT: net → gross
gross = net · (1 + s / 100)%
Gross1,230.00
- VAT amount230.00
- Net1,000.00
Everyday sums
VAT and trade
Net, gross, margin, markup, discounts and unit price.
In trade, the same transaction looks different depending on what the percentage is taken from. VAT is added to the net amount, so you get back from the gross by dividing, not by subtracting. Margin is taken on the selling price and markup on the purchase cost — for the same profit, a 25 % margin is a 33.3 % markup.
Calculators
7VAT: gross → net
net = gross / (1 + s / 100)%
Net1,000.00
- VAT amount230.00
- Gross1,230.00
- VAT share of the gross18.70%
Margin vs markup
margin = profit / price · 100 %Margin20.00%
- Markup (taken on cost)25.00%
- Profit per unit20.00
- Price to cost ratio1.25
Price at the target margin
price = cost / (1 − m / 100)%
Selling price106.67
- Profit26.67
- Equivalent markup33.33%
Discount on the price
price = c · (1 − r / 100)%
Price after discount174.30
- You save74.70
- You pay70%
Stacked discounts
price = c · (1 − r₁) · (1 − r₂)%
%
Final price315.00
- Combined discount37.00%
- Discounts added up (wrong)40.00%
- You save185.00
Price per unit
unit price = price / quantityPrice per 1,000 units17.99
- Price per 1 unit0.01799
- Per 100 units1.80
Tables and cheat sheets
2VAT rates in Poland
typical examples; the full list of goods and services is set out in the VAT Act| Rate | net → gross | gross → net | Typical examples |
|---|---|---|---|
| 23 % | × 1,23 | ÷ 1,23 | standard rate — most goods and services |
| 8 % | × 1,08 | ÷ 1,08 | residential construction, restaurant services and medicines, among others |
| 5 % | × 1,05 | ÷ 1,05 | basic foodstuffs, books and specialist periodicals, among others |
| 0 % | × 1,00 | ÷ 1,00 | exports of goods and supplies within the European Union |
| exempt | — | — | an exemption by product or by taxpayer — no VAT arises at all |
Margin vs markup
the same sale worked out on the price and on the cost| Margin | Markup | Price at a cost of 100 |
|---|---|---|
| 5 % | 5.26% | 105.26 |
| 10 % | 11.11% | 111.11 |
| 15 % | 17.65% | 117.65 |
| 20 % | 25.00% | 125.00 |
| 25 % | 33.33% | 133.33 |
| 30 % | 42.86% | 142.86 |
| 35 % | 53.85% | 153.85 |
| 40 % | 66.67% | 166.67 |
| 50 % | 100.00% | 200.00 |
| 60 % | 150.00% | 250.00 |
Worked examples with full solutions
2An invoice worked back from the gross amount
A customer paid $1,230 gross at a 23 % rate. What is the net amount, and what is the tax on its own?
- Gross is net plus 23 %
gross = net · 1.23 - Reverse the calculation
net = 1230 / 1.23 = $1,000.00 - The tax is the difference
1230 − 1000 = $230.00 - Checking the tax share of the gross
230 / 1230 = 18.70 % — which is why you cannot simply take 23 % off the gross
Answer: Net $1,000.00, tax $230.00.
A 25 % margin is not a 25 % markup
An item costs $80. You want a 25 % margin. What should you sell it for?
- Margin is taken on the selling price
price − cost = 0.25 · price - Rearrange the formula
price · (1 − 0.25) = 80 → price = 80 / 0.75 - Calculate
price = $106.67 - Check the markup
(106.67 − 80) / 80 = 33.3 % — the markup is higher than the margin
Answer: A net price of $106.67: a 25 % margin and a 33.3 % markup.
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