VAT, IVA, GST, sales tax — what the numbers actually mean

Almost every receipt in the world shows three numbers near the bottom: subtotal, tax, total. The labels and the relationship between them vary by country and tax system. For consumers it usually doesn't matter; the bottom line is what comes off the card. For businesses doing expense tracking or VAT recovery it matters a lot, because the structure of the tax determines what you can and can't claim back.

This guide is a practical tour of the main systems — VAT, IVA, TVA, MwSt, GST, sales tax — what they look like on a receipt, and what to capture from each. It deliberately avoids tax advice (we're not your accountant); the goal is to give you enough context to read a receipt from anywhere and know what you're looking at.

The two big families: VAT-style and sales-tax-style

Consumption taxes around the world split into two broad families:

• Value Added Tax (VAT) family — the tax is collected at every stage of the supply chain, and businesses can reclaim the VAT they paid on inputs. The displayed price typically includes the tax. Used across the European Union, the UK, most of Latin America, China, India (as GST), Australia (as GST), and many others.
• Sales tax family — the tax is collected only at the final sale to the consumer. Businesses generally cannot reclaim sales tax on their purchases (with narrow exceptions for resale). The displayed price typically excludes the tax. Used in the United States and a handful of others.

This single design difference explains almost everything that looks weird when you compare a European receipt with an American one.

Reading a VAT-family receipt

A typical EU restaurant receipt shows:

• Line items with prices that already include VAT.
• A subtotal that's the gross amount (i.e. including VAT).
• A VAT breakdown showing the rate (e.g. 10% on food, 22% on alcohol in Italy) and the amount of VAT included in the total.
• The grand total, which equals the subtotal (no addition, because VAT was already in the line prices).

For example, an Italian receipt might read: Pasta — €12.00 ... Subtotale: €34.00 — IVA 10% inclusa: €3.09 — Totale: €34.00. The €3.09 is just informational — it's already part of the €34. The diner pays €34, the restaurant remits €3.09 to the tax authority, and the restaurant's VAT-registered customers (other businesses) can later claim the €3.09 back as input VAT.

In the VAT family the tax line is a disclosure, not an addition. The total has always been the total; the breakdown just tells you how much of that total is VAT.

Reading a sales-tax receipt

A typical US restaurant receipt shows:

• Line items with prices that exclude sales tax.
• A subtotal that's the net amount (i.e. excluding tax).
• A sales-tax line showing the rate and the dollar amount being added to the subtotal.
• A grand total that equals subtotal + tax (and possibly + tip).

For example, a Texas receipt might read: Burger — $12.00 ... Subtotal: $28.00 — Sales tax (8.25%): $2.31 — Total: $30.31. The diner pays $30.31. The restaurant remits the $2.31 to the state. There is no equivalent of "input VAT recovery"; the business that buys the burger can't claim the $2.31 back.

In the sales-tax family the tax line is an addition. The subtotal is what you would have paid if there were no tax; the total is what you actually paid.

Country quirks worth knowing

Within each family, individual countries add their own wrinkles:

• Italy (IVA). Receipts above a small threshold must be "scontrini fiscali" — fiscally-printed receipts with a serial number — for the business buyer to deduct anything. A regular till slip is sometimes not enough. Ask for a "fattura" or "ricevuta fiscale" if you need to deduct.
• Germany (Mehrwertsteuer / Umsatzsteuer). The receipt must show the vendor's tax ID (Steuernummer or Umsatzsteuer-ID) for B2B VAT recovery. Without it, the receipt can't be used to reclaim input VAT.
• UK (VAT). Like Germany — VAT receipts above £250 must show the VAT registration number, the tax amount per VAT rate, and the date.
• Spain (IVA). Restaurants and most retail use "tickets" that omit the buyer's name; for business deductions you usually need to ask for a "factura" with your tax ID printed on it.
• France (TVA). Similar rules; the vendor must put their SIRET and TVA number on the invoice for the customer to deduct.
• United States (sales tax). Rate varies wildly by state, county, and city — the same restaurant in Austin and Dallas charges different tax rates. Some categories are exempt (groceries in many states, prescription drugs, services in some states); the receipt will show only the taxable items having tax.
• Canada (GST/HST/PST). Federal GST is 5%; some provinces add Harmonized Sales Tax (HST) on top so the receipt shows a single combined rate; others (Quebec, Saskatchewan, Manitoba) have separate Provincial Sales Tax (PST) lines.

Why this matters for businesses

For VAT-family countries, every receipt you keep is potentially money in your pocket: the VAT amount can be reclaimed against the VAT you collect from your own customers. This means VAT-registered businesses care intensely about which receipts have proper VAT disclosure (showing rate + amount + vendor tax ID) versus receipts that are just informal slips.

The "exclude tax from exports" toggle in Receipt Ripper is designed for this: when handing receipts to an external bookkeeper, some jurisdictions discourage sharing tax-itemised data outside the business. Toggle it on and the tax columns disappear from the CSV / XLSX / ZIP exports.

For sales-tax countries, the tax usually isn't recoverable, so the only reason to capture it is for accurate expense totals. The tax is effectively just a price markup that varies by jurisdiction; you record the gross amount and move on.

When the receipt is wrong

Receipts can have arithmetic errors that the validator will flag. The most common patterns:

• Rounding mismatch. Items are stored as cents internally but printed rounded to two decimals; sum-of-prices vs printed subtotal can disagree by a cent. Almost always benign.
• Discount-not-itemised. The merchant gave a loyalty discount that's reflected in the total but not shown as a separate line item. The validator complains; manually verify the total matches what you paid.
• Tip added to total. US restaurant receipts often add the tip into the grand total, throwing off the "subtotal + tax = total" check. The tip field captures this; check the receipt visually if the validator is unhappy.
• VAT-included shown as a line. Some EU receipts print "IVA 10% €3.09" as a line item rather than a footer summary; the parser usually skips this, but eyeball the result if VAT is missing in the export.

The bottom line

For day-to-day use, you don't need to memorise the tax-system family of every country you visit. Receipt Ripper auto-detects the structure from the receipt itself: where the parser sees an "IVA" or "MwSt" or "TVA" line, it treats the tax as included; where it sees "Sales Tax" or "Tax", it treats it as added. The exports respect this distinction.

For business filing, the practical rule is: keep the original receipt (paper or PDF) and let the categorisation and tax-extraction happen in Receipt Ripper. If your accountant later asks "is this VAT-recoverable?", the answer depends on whether the vendor's tax ID is on the receipt and whether your business is VAT-registered in the same jurisdiction — both of which you can answer by looking at the original image.

For more on what to do with the categorised, tax-extracted output, see receipt categories for bookkeeping and organising receipts for tax season.