A procurement manager receives two commercial proposals. Supplier A writes: "120,000 ₽ including VAT." Supplier B writes: "105,000 ₽ excluding VAT." Which one is actually cheaper? The catch is that you cannot compare these figures directly.
What "with VAT" and "without VAT" Mean
A price with VAT is the total amount the buyer actually pays. It already includes the tax. For example, 120,000 ₽ with VAT means 100,000 ₽ base price plus 20,000 ₽ tax.
A price without VAT is the amount before tax is added. A buyer on the standard VAT system will then need to pay VAT on top. At a 20 % rate, the 105,000 ₽ base will cost an additional 21,000 ₽.
Why Direct Comparison Is Wrong
In our example:
- Supplier A: 120,000 ₽ with VAT
- Supplier B: 105,000 ₽ without VAT
At first glance, B looks cheaper. But this comparison is incorrect — the bases are different.
To compare correctly, let's bring both prices to the without VAT format:
Supplier A: 120,000 ÷ 1.20 = 100,000 ₽ without VAT Supplier B: 105,000 ₽ — already without VAT
Now it is clear: A = 100,000 ₽, B = 105,000 ₽. Converting to "with VAT":
Supplier A: 100,000 × 1.20 = 120,000 ₽ with VAT Supplier B: 105,000 × 1.20 = 126,000 ₽ with VAT
Result: offer A is cheaper by 6,000 ₽.
Quick Method with the Calculator
No need to calculate mentally. Enter the price with VAT in the "Extract VAT" field — the calculator shows the amount without tax. Enter the price without VAT in the "Add VAT" field — you see the total with tax. Compare the results.
Which Format to Use and When
For a buyer on the standard VAT system (obshchaya система) who can claim input VAT deductions, the with VAT price is what matters — they will recover the tax.
For a buyer on the simplified system (USN) or a private individual, the without VAT price is what matters — they cannot claim VAT deductions.
For a correct comparison, always bring both prices to the same base.
Common Mistakes
- Comparing "120,000 with VAT" and "105,000 without VAT" directly — these are different amounts.
- Forgetting that the VAT rate can be 10 % — some goods use a reduced rate.
- Using the wrong formula for extracting vs adding VAT — the calculation method differs for each direction.
FAQ
Why do suppliers quote "excluding VAT"?
Companies on the USN (simplified system) are not VAT payers and quote without tax. This is correct for them. But a buyer on the standard system must add VAT on top themselves.
What if the VAT rate is 10 %?
The same principle applies: to extract VAT from a sum that includes 10 % VAT, divide by 1.10. To add 10 % VAT, multiply by 0.10.
Can I compare without recalculating?
Only if both suppliers quote in the same format. Otherwise, recalculation is required.
The calculator helps verify the calculation, but it does not replace accounting advice.