Percentages » VAT/BTW

1. What is VAT/BTW?

VAT stands for 'Value Added Tax' also known as sales tax. The Dutch abbreviation is BTW. Which stands for 'Belasting over de Toegevoegde Waarde'. Most governments impose this tax on the sale of products or services. The consumer (and organisations who do not have to impose these taxes themselves) are paying these taxes. On most products and services the high tariff of 21% is imposed. For food, agrarian products, books and some services there is a low tariff of 6%. These two percentages are imposed in the Netherlands. Britain uses a high tariff of 20%, reduced tariff of 5% and a low tariff of 0%. Every country chooses these percentages themselves. In some countries there are two of these taxes. For example, in Canada there is a federal tax and a provincial tax (except for Alberta). For that reason prices there are often shown without the VAT. Note: before the high tariff became 21% in the Netherlands, it was 19%. For that reason in a some exercises 19% might still be used.

2. Excluding to including VAT

The amount excluding is 100% and the amount including is 121%.

Example

A shop keeper wants to have 23.20 euros left on an article that he sells.
So this is the amount excluding VAT. What is the amount including VAT?

Ratio table:  
:100
pijl half rond
×121
pijl half rond
euros 23.20 ... 28.07
percentage 100 1 121
pijl half rond
:100
pijl half rond
×121
 
Growth factor:  23.20 × 1.21 = 28.07


3. Including to excluding VAT

Again the amount including is 121% and the amount excluding is 100%.

Example

A pair of pants costs 69 euros including VAT. What is the price excluding VAT?

Ratio table:  
:121
pijl half rond
×100
pijl half rond
euros 69 ... 57.02
percentage 121 1 100
pijl half rond
:121
pijl half rond
×100
 
Growth factor:  69 : 1.21 = 57.02


NOTE: Doing × 0.79 is wrong!

That is calculating from 100% to 79%!
So you are calculating a reduction of 21% over 121%.
That will get you 121 × 0.79 = 95.59%.