Definition

Value Added Tax, the European way of making you pay incrementally for everything at each stage of production and distribution. Unlike American sales tax that hits you once at checkout, VAT is baked into the price at every step, making it simultaneously more transparent and more insidious. British tourists love explaining this to confused Americans at duty-free shops.

Example Usage

The invoice showed a 20% VAT charge, bringing the total cost of the consulting services to £12,000.

Source: Tax and accounting terminology

Related Terms

Beginner

generally accepted accounting principles

The rulebook for financial reporting in the US, commonly abbreviated as GAAP. It's the reason accountants can't just make up whatever numbers feel right, though creative interpretation remains an art form.

💰 Finance / Accounting
Intermediate

clawback

A provision requiring executives to return compensation if certain conditions aren't met or if it was based on fraudulent numbers. It's the corporate version of 'give that back right now.'

💰 Finance / Accounting
Intermediate

net present value

The difference between the present value of cash inflows and outflows over time, discounted because a dollar today is worth more than a dollar tomorrow—thank you, inflation and opportunity cost. If it's positive, invest; if negative, run away.

💰 Finance / Accounting
Advanced

pari passu

Latin for 'equal footing,' meaning creditors or securities rank equally in priority for payment. If the ship sinks, you all go down together—very democratic, if not particularly comforting.

💰 Finance / Accounting
Intermediate

multiple

In finance, it's the magical number you get when dividing a company's stock price by its earnings—the higher the multiple, the more investors believe in fairy tales about future growth. Also known as the P/E ratio, it tells you how many years of current profits you're paying for today. Basically, it's the market's way of saying 'trust me bro' with numbers.

💰 Finance / Accounting
Beginner

reserve for bad debts

An estimate of accounts receivable that will never be collected, subtracted from assets to present a more realistic balance sheet. It's acknowledging that some customers are deadbeats before they officially become deadbeats.

💰 Finance / Accounting

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lmcao

laughing my crazy ass off...