How VAT is calculated

Updated 15 September 2026

Which rate?

The plugin follows the EU rule for consumers: they pay the VAT of their own country. The country comes from the billing address.

• Billing country in the EU: the rate of that country. With “Disable variable VAT” on: the rate of your default tax country.
• No country yet, or no billing address linked: the rate of your default tax country.
• Billing country outside the EU: no VAT. With “Apply VAT worldwide” on: the rate of your default tax country.
• Valid VAT number from another EU country: no VAT, the reverse charge applies.

The calculation

First the plugin adds up what the VAT is calculated over:

• the taxable products, each as (price + option prices) × quantity,
• plus the shipping costs,
• minus the coupon discount that belongs to these products.

Then the VAT is that amount × rate / 100, rounded to two decimals.

Example: a product of €100 with a €10 option, quantity 2, and €10 shipping, for a customer in Germany (19%). The VAT is calculated over (100 + 10) × 2 + 10 = €230, so the VAT is €43,70 and the total €273,70.

When your prices already include VAT, the plugin doesn’t add VAT but calculates how much is in the price, see Prices include VAT. Which products and discounts count is explained in Taxable products, shipping and coupons.

Calculated twice: in the form and on the server

While your customer fills in the form, the VAT is calculated in the browser, so it updates right away when they change a product or a country. After submitting, the plugin calculates the VAT again on your server, from the same order, country and VAT number. That second amount is the one that is saved in the entry, charged by your payment add-on and shown in the order summary and your emails. Changing the VAT in the browser has no effect on what is charged.

Gravity Forms 3 also checks that the total in the Total field matches the total it calculates itself. Because both sides round the same way, they normally match to the cent; the plugin accepts a difference of at most one cent for rounding.