It is certain that very often you hear the word VAT – but do you know what exactly VAT is? And if “yes”, how do you calculate it? Having already talked in a previous article about taxes and their basic concepts, now we will refer to and analyze what VAT is and how you will easily calculate it in your purchases, like a genuine cool consumer!
So, analyzing the acronym of VAT – Value Added Tax, you realize that we are basically talking about an additional tax that the state puts in place to increase its revenue. We pay VAT when we buy a product or service. VAT, like most other taxes, appears in our lives in the form of a percentage (%) called the “tax rate”. In VAT, however, it is very useful to know that this coefficient (i.e. the percentage) is not always the same. This percentage of VAT changes depending on the type of good or service we buy.
For example, in sunny Greece in recent years this rate for most products and services is 24%. However, in some goods such as pharmaceuticals it falls to 13% while for some services such as hotel services it reaches 6%. Finally, some services such as sports, education and healthcare have no VAT at all.
An easy and quick way to calculate how much money is added to a purchase with VAT is to simply multiply the initial value (price of the product) by the VAT factor. The number resulting from the calculation is the money added to the original price of the product due to VAT (20 + 4.80 = 24.80 final price).
Now that you know better what VAT is and how to calculate it, you can make your purchases even better as a truly smart consumer!