How to calculate Italian VAT, and how to remove it

Adding VAT: a multiplication

The price before VAT is the net amount (in Italian, imponibile). VAT is calculated on it, and the total is the sum of the two.

VAT = net × rate ÷ 100 Total = net + VAT

At the standard rate of 22%: €100 net gives €22 of VAT and a total of €122. In one step, total = net × 1.22.

With the reduced rates only the factor changes: × 1.10 for 10%, × 1.05 for 5%, × 1.04 for 4%. Which rate applies to a product is set by Table A of Decree 633/1972: Italian VAT rates summarises it with examples.

Removing VAT: a division

The scorporo is the journey back: you know the VAT-inclusive total and want the net amount. Since the total is the net amount multiplied by 1.22, to go back you divide.

Net = total ÷ (1 + rate ÷ 100) VAT = total − net

From €122: 122 ÷ 1.22 = €100 net, and €22 of VAT. From €1,000 gross at 22%: 1,000 ÷ 1.22 = €819.67 net and €180.33 of VAT.

You need it whenever a price arrives "all in" and you care about the deductible part: an expense claim, comparing a quote excluding VAT with one including it, an invoice to book.

The mistake everyone makes: subtracting 22%

It feels natural: if the total includes 22% VAT, take 22% off. But the 22% was charged on the net amount, which is smaller than the total, so 22% of the total is a bigger figure than the real VAT.

• €100 + 22% = €122
• €122 − 22% = €95.16 ← wrong
• €122 ÷ 1.22 = €100 ← correct

The gap is 4.84% of the net amount: invisible on a coffee, €484 on a €10,000 quote. The Italian VAT calculator always divides, and the same rule holds for any percentage you need to undo, as how to calculate a percentage explains.

Rounding to the cent without losing one

In real sums the net amount is rarely round. The practical rule: work out the total (or the net amount, when removing) rounded to the cent, and take the VAT as the difference. That way net plus VAT lands exactly on the total, which is what has to add up on an invoice. Rounding the VAT first and then adding can leave a cent of drift.

Example: €33.33 net at 22%. Total 33.33 × 1.22 = 40.6626 → €40.66. VAT = 40.66 − 33.33 = €7.33. Rounding the VAT first (7.3326 → 7.33) and then adding gives the same result here, but not always.

When there is nothing to calculate

If the operation is exempt (article 10 of Decree 633/1972, for instance many health services), non-taxable (exports) or takes place in Livigno or Campione d'Italia, outside the territory of the tax, there is no VAT to add or to remove. The same goes for invoices under the flat-rate regime: no VAT on the invoice, so the total equals the net amount.