Gross, Net, 19% or 7%: How to Calculate VAT Correctly

It is one of the most common calculation errors in daily business: taking €119 gross and “simply deducting 19%” – result: €96.39. Sounds plausible, but it is wrong. The correct net amount is €100.00. The difference arises because the 19% is added onto the net amount, not subtracted from the gross.

If you write invoices, calculate prices, or compare quotes regularly, you need the two core VAT formulas cold. This article delivers them – with examples, the key edge cases, and the typical traps.

The two formulas you actually need

From net to gross (adding VAT):

Gross = Net × (1 + Rate ÷ 100)

€100 net × 1.19 = €119.00 gross. The tax amount is the difference: €19.00.

From gross to net (extracting VAT):

Net = Gross ÷ (1 + Rate ÷ 100)

€119 gross ÷ 1.19 = €100.00 net. Crucially: divide by 1.19 – do not “subtract 19%”. For the reduced rate, divide by 1.07.

This reverse calculation is the default case in e-commerce: marketplace prices are consumer prices, i.e. gross. But your revenue bookings, your margin and your VAT return are all based on the net value.

19% or 7%? The rate follows the product

Germany has two VAT rates: the standard rate of 19% and the reduced rate of 7% – the latter for food, books (including e-books), newspapers and local public transport, among others. For sellers with mixed catalogues this means the tax must be right per line item, not per invoice. An order containing a cookbook (7%) and a kitchen knife (19%) carries two tax lines.

Example (gross €119 / €107)	19%	7%
Gross amount	€119.00	€107.00
Net amount	€100.00	€100.00
VAT contained	€19.00	€7.00

When selling into other EU countries beyond the distance-selling threshold, the destination country’s rate applies – our guide to VAT in e-commerce explains how that works and where the One-Stop-Shop (OSS) fits in.

The four most common real-world errors

Percentage of the wrong base. The classic from the introduction: deducting 19% from gross instead of dividing by 1.19. At €10,000 of monthly revenue, this error miscalculates your margin by more than €260.

Rounding per invoice instead of per line. Tax amounts are calculated and rounded per line item; rounding only the total produces cent differences that surface when reconciling against marketplace settlements.

Missing mixed rates. Shipping costs share the VAT treatment of the goods they accompany – proportionally for mixed baskets. A flat 19% on shipping is simply wrong for 7% goods.

Calculating gross, thinking net. Your pricing floor must rest on net proceeds. How hard fees and VAT pull on margin together is shown in the worked example of our Amazon fees guide.

Faster than mental arithmetic: the VAT Calculator

For everyday use – checking a quote, verifying an invoice, estimating a margin – we built the free VAT Calculator: enter an amount, pick the direction (net → gross or gross → net), choose 19%, 7% or any EU rate. The calculator shows all three values – net, tax, gross – instantly and ready to copy.

Conclusion: two formulas, zero excuses

Calculating VAT correctly is not tax advice, it is craft: divide by 1.19 instead of subtracting 19%, check rates per line item, price on net. For everything recurring, there is the VAT Calculator – free, right in your browser.

In live bookkeeping, however, this calculation occurs on every single order – across marketplaces, rates and countries. That is exactly where KudTax takes over: VAT is extracted automatically for every sale, mapped to the correct rates, and handed to DATEV ready to book. The formula becomes a process that runs on its own.