On an invoice, “net” is an amount before tax and “gross” is the same amount with tax included. A typical invoice shows net line totals, the tax calculated on the net figure, and the gross total the client pays. For VAT invoices in the EU, the VAT Directive requires the taxable amount per rate, the unit price exclusive of VAT, the VAT rate and the VAT amount (Article 226, points 8 to 10), so the net figures have to be there, not just the gross total. Example (at a 20% rate): net €500, VAT €100, gross €600. To get from a gross price back to net, divide by 1.20 rather than subtracting 20%: €600 ÷ 1.20 = €500, while €600 minus 20% gives €480. Common mistakes: quoting a price without saying whether it's net or gross, and that reverse-calculation error. Payroll uses the same words differently (gross pay before deductions, net pay after), and “Net 30” in payment terms is another sense again: the full amount is due 30 days after the invoice date.
What do net and gross mean?
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