VAT (Value-Added Tax)
A consumption tax applied at each stage of a product's sale in many countries outside the US.
In practice
Unlike US sales tax, which is only charged at the final point of sale, VAT is collected and remitted at each stage of production and distribution, with businesses reclaiming the VAT they paid on their own inputs - the end consumer ultimately bears the full cost.
A product sold in the UK includes 20% VAT built into the displayed price, unlike in the US where sales tax is typically added at checkout.
Why it matters
Mispricing for VAT - forgetting it's often included in the displayed price rather than added at checkout - is a common mistake for businesses expanding from the US into VAT-charging markets.
Worth knowing
- Collected and remitted at each stage of production and distribution, rather than at final sale only.
- Businesses can typically reclaim VAT paid on their own business inputs and expenses.
- Rates vary significantly by country, and some categories qualify for reduced or zero rates.
Start the conversation
Let's talk it through
Tell us where things stand with putting vat into practice and we'll respond with next steps, no forms, no waiting in a queue.
- A specialist replies directly, not a support queue
- Whichever channel is fastest for you, call, WhatsApp or email
- No long-term contract to start the conversation
