calculating gross from net amount

[babesz]

Hello,

I'm turning to you with a very basic question.

Suppose I have received a net payment of 100 euros and want to calculate the gross amount of it so that I can pay the tax to the tax authority. Let's say the tax rate is 16% in my country.

According to a formula I found on internet the way to go about finding out the gross amount is to multiply the net amount by 1 + VAT percentage (so in my case, this means multiplying by 1.16 if VAT is 16%). The gross amount is, thus, 116 euros.

However if I want to verify this calculation, I cannot do so.

if 116 euros is ... 100%
then 1% is .........1,16,
and 16% is........18,56 euros,
and if I deduct 18,56 euros from the gross 116 euros, that's just 97.44 euros, less then the initial net 100 euros I had.

There's clearly something wrong, but I have no idea what I am net getting here.

Can you pls help?

 

[Ishuda]

Hello,

I'm turning to you with a very basic question.

Suppose I have received a net payment of 100 euros and want to calculate the gross amount of it so that I can pay the tax to the tax authority. Let's say the tax rate is 16% in my country.

According to a formula I found on internet the way to go about finding out the gross amount is to multiply the net amount by 1 + VAT percentage (so in my case, this means multiplying by 1.16 if VAT is 16%). The gross amount is, thus, 116 euros.

However if I want to verify this calculation, I cannot do so.

if 116 euros is ... 100%
then 1% is .........1,16,
and 16% is........18,56 euros,
and if I deduct 18,56 euros from the gross 116 euros, that's just 97.44 euros, less then the initial net 100 euros I had.

There's clearly something wrong, but I have no idea what I am net getting here.

Can you pls help?

You have been given the wrong formula. Suppose G is the gross, N is the net and r is the tax rate. Then
N = G - G r = G (1-r)
so
G = N / (1-r)

G = 100/0.84 = 119.05

To check
16% of 119.05 = 19.05

 

[babesz]

You have been given the wrong formula. Suppose G is the gross, N is the net and r is the tax rate. Then
N = G - G r = G (1-r)
so
G = N / (1-r)

G = 100/0.84 = 119.05

To check
16% of 119.05 = 19.05

Yes, that works! thank you so much.

May I also ask how did you come up with the formula N = G - G r? I would have written N = G - r, and don't understand why did you include another G.

(Sorry, I hope I'm not too tiring)