How do you accurately calculate the net cost of a product or service?

How to Calculate the Net Cost at the VAT Rate of 20%

Deducting VAT

If you have a gross amount and want to determine the net value, then simply divide the gross value by 1.20 to provide the net value.

For example, an invoice that includes VAT totalling £150 would have a VAT amount of £25 with the net value at £125. This result is calculated by dividing £150 by 1.2 which gives the net value of £125 with the difference being the tax at 20%.

How to Calculate the Net Cost at the VAT Rate of 5%

If you have a gross amount and want to determine the net value, then simply divide the gross value by 1.05 to provide the net value.

 For example, an invoice that includes VAT totalling £150 would have a VAT amount of £7.17 with the net value at £142.83. This result is calculated by dividing £150 by 1.05 which gives the net value of £142. 83with the difference being the tax at 5%

The net amount is the value you use in your accounts for purchases and sales if you're a VAT registered company.

For those who pay TVA in France the formulae are the same as above.