Business Tax

VAT inclusive price

Net price

VAT rate

Direction

Price to display 59.89

49.5 + 21% VAT

VAT element 10.4

Net retained 49.5

Rate 21 %

Consumer prices display inclusive

A VAT-inclusive price is the net multiplied by one plus the rate. A net 49.50 at 21% displays as 59.90 — and consumer law in most of Europe requires that inclusive figure to be the prominent one.

How to set a VAT inclusive price

1 Enter the net price you need to retain.

2 Enter the VAT rate for the product category.

3 Read the display price.

4 Round to a sensible price point and work backwards to check the net still holds.

Rounding to a nice inclusive figure is where the net quietly changes. Deciding to display 59.95 rather than 59.90 lifts the net from 49.50 to 49.55 — trivial per unit, but it means your price list and your accounting figure disagree unless you update both. The usual practice is to choose the inclusive price first, since that is what the customer sees, then let the net fall out of it rather than the other way round.

Questions

Must I display prices including VAT? −

To consumers in the EU and UK, yes — the inclusive price must be the prominent one. Business-to-business price lists may show net.

How do I get a round inclusive price? +

Does VAT apply to shipping? +

What if I sell to both consumers and businesses? +

Does the inclusive price change if the rate changes? +

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