VAT: how value-added tax works and the two sums that trip people up
VAT, or value-added tax, is a tax on what people spend rather than what businesses earn, collected in small slices at every stage a product passes through — yet the entire amount is ultimately paid by the person who buys the finished thing. Every business in the chain is a collector, not a payer. In Ireland the standard rate is 23% (Revenue, as of this review).
How the chain works in one breath
Each business charges VAT on what it sells and reclaims the VAT it was charged on what it bought, then forwards only the difference to the tax authority. A supplier bills a manufacturer; the manufacturer bills a shop but reclaims what the supplier charged; the shop bills you but reclaims what the manufacturer charged. At every link, the state receives tax only on the value that link added. It all empties onto one person: the final consumer, who charges no one and reclaims nothing.
The two sums everyone actually needs
Almost every VAT question is one of two calculations.
Adding VAT to a net price. Take the price before tax and add the rate. A net €100 at 23% carries €23 of VAT, so the gross price is €123. The same €100 at the reduced 13.5% rate becomes €113.50.
Getting the net back out of a gross price. This is the one people get wrong. You cannot subtract the rate from the gross figure. Take €123 including 23% VAT: the net is €100 and the VAT inside is €23 — not the €94.71 you get by taking 23% off €123. Subtracting removes too much, because the 23% was calculated on the smaller net figure, not on the gross. To reverse it you divide, not subtract.
Two worked reversals, both at gross prices of €500:
| Gross price | Rate | Net price | VAT inside |
|---|---|---|---|
| €500 | 23% | €406.50 | €93.50 |
| €500 | 13.5% | €440.53 | €59.47 |
What you can do from this page
Convert between net and gross in either direction at any rate, and understand why the reverse calculation behaves the way it does before you rely on a number.
Irish VAT rates
Ireland applies several rates, set by Revenue and revised at budgets (Revenue’s current-VAT-rates table, effective 1 January 2026, as of this review).
| Rate | Percentage |
|---|---|
| Standard | 23% |
| Reduced | 13.5% |
| Second reduced | 9% |
| Livestock | 4.8% |
| Flat-rate farmers | 4.5% |
The livestock and flat-rate farmer percentages are agricultural by name. Which goods and services fall under each rate is set out in Revenue’s own rates database, and it changes; check there rather than assuming a rate from the figure alone.
Last reviewed 7 July 2026
Calculate it
Understand it
Ireland’s VAT rates as published by Revenue — the standard 23%, the reduced rates, and what “as of” really means.
Guide How VAT worksValue-added tax explained: charged at every stage, reclaimed by businesses, and finally paid by the consumer.
Guide Adding and removing VAT: the mathsAdding VAT multiplies; removing it divides. Why subtracting the rate from a gross price is always wrong.
Guide Who actually pays VATBusinesses collect it, reclaim it and hand it on — the whole chain lands on the final consumer. How and why.
GuideCompare
See it in numbers
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Questions people ask
What is the VAT rate in Ireland?
Ireland's standard VAT rate is 23%, alongside reduced rates of 13.5% and 9%, a 4.8% livestock rate, and a 4.5% flat-rate percentage for farmers, as published by Revenue and effective from 1 January 2026. Which rate applies to a given item or service depends on Revenue's VAT rates database, since goods are sorted into these bands by category rather than by a single universal rule. Rates and their coverage can change, so this reflects the position as of this review.
How do I add VAT to a price?
You add VAT by multiplying the net price by one plus the VAT rate. A €100 net price with 23% VAT becomes €100 x 1.23 = €123 gross. The VAT amount on its own is simply the net price multiplied by the rate, so on that same €100 it comes to €23.
How do I take VAT off a price?
You remove VAT by dividing the gross price by one plus the VAT rate. A €123 price that includes 23% VAT works out to €123 / 1.23 = €100 net. Simply subtracting 23% from €123 instead gives €94.71, which is wrong, because the VAT was calculated on the smaller net figure, not on the gross price you're starting from.
What is the difference between gross and net?
Gross is the total figure before anything is taken out; net is what remains after a deduction, which is VAT in the case of prices and tax in the case of pay. A business that quotes a price "plus VAT" is quoting its net price, with VAT still to be added. A shelf price a consumer sees in a shop, by contrast, is gross, since VAT is already included.
What is the difference between zero-rated and exempt?
Zero-rated sales carry VAT at 0% but stay inside the VAT system, so the seller can still reclaim the VAT it paid on its own costs. Exempt sales sit outside the system entirely, so there is no VAT to charge and no reclaim on costs either. The distinction matters far more to the business making the sale than to the consumer paying it, and each country's tax authority sets out which goods and services fall into which category.