Withholding Tax Invoice Calculator (VAT and Income Tax Withheld)
Work out a freelance or professional invoice with VAT added and income tax withheld by the client: invoice total, amounts withheld, the net payment you receive — or the fee needed for a set net amount.
How it works
VAT = fee × VAT rate · invoice total = fee + VAT · income tax withheld = fee × withholding rate · VAT withheld = VAT × share withheld · net payment = invoice total − withholdings · fee for a target net = net ÷ (1 + VAT − withholding − VAT × VAT share withheld)
In many countries a business that pays a freelancer or professional must withhold part of the fee as an advance on the freelancer’s income tax and pay it to the tax authority — for example IRPF withholding in Spain, ISR and IVA withholding on fee receipts in Mexico, or expanded withholding tax in the Philippines. VAT is added on top of the fee and the withholding is subtracted, so the payment you receive differs from the invoice total. Withheld income tax is not lost: it is credited against your tax when you file.
Worked example
A $1,000 fee with 16% VAT gives $160.00 of VAT and an invoice total of $1,160.00. The client withholds 10% income tax ($100.00) and no VAT, so the net amount you receive is $1,060.00 — 91.38% of the invoice total.
Sources: Wikipedia — Withholding tax · Agencia Tributaria — Retenciones a profesionales · Philippines BIR — Expanded withholding tax
Frequently asked questions
How do I calculate an invoice with withholding tax?
Add VAT to your fee to get the invoice total, then subtract the income tax withheld (a percent of the fee, not of the total) and any VAT withheld. The rest is the net payment.
Is withholding calculated on the fee or on the total with VAT?
Income tax withholding is normally a percent of the fee before VAT. VAT withholding, where it exists, is a share of the VAT itself.
How much should I invoice to receive a set net amount?
Divide the net amount by (1 + VAT rate − withholding rate − VAT rate × VAT share withheld). Choose "The net amount I want to receive" above to do it automatically.
Do I get the withheld tax back?
It is an advance payment of your income tax. When you file, it is subtracted from what you owe, and any excess is refunded.
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Estimate for planning only — not tax, legal or financial advice. Tax rates, thresholds and rules depend on your country and situation; confirm with your tax authority or a qualified adviser before you rely on the figures.