Currency conversion and tax in EPSO numerical reasoning
Converting between currencies and moving between prices with and without tax. The calculations are short, but each has a direction (multiply or divide) and taking the wrong one gives a plausible answer.
6,901 answers, last 60 days · The test gives you 2 minutes per question (10 questions in 20 minutes).
How to recognise it
- Which job pays more in euro terms?
- What is the tax-exclusive price?
- How much is the price net of VAT?
The method
- Currency: read the direction of the rate. With "1 EUR = 25 CZK", koruna to euro is ÷ 25, euro to koruna is × 25.
- Check the order of magnitude: 45,000 koruna cannot be worth more euros than koruna.
- Tax: the price with VAT is the price without VAT × (1 + VAT rate), so the price without VAT is the price with VAT ÷ (1 + VAT rate).
- If the table gives the tax as a share of the final price, the price without tax is the price × (1 − share).
Worked example
A question from our bank, in EPSO format.
| Currency | Rate |
|---|---|
| Czech koruna (CZK) | 25 |
| Hungarian forint (HUF) | 390 |
| Polish zloty (PLN) | 4.3 |
A worker in Prague earns CZK 45,000 a month. The same role in Bratislava pays €1,650 a month. Which pays more in euro terms?
Choose an answer to see the solution.
The traps
The direction of the rate
Multiplying 45,000 by 25 instead of dividing gives over a million: the order of magnitude shows the mistake at once. With rates close to 1 (1 EUR = 0.85 GBP) it does not, so read the header every time.
Removing VAT by subtraction
A €3.50 price with 21% VAT is €3.50 ÷ 1.21 = €2.89 before tax. Taking 21% off (€3.50 × 0.79 = €2.77) is wrong, because the 21% was calculated on the lower, tax-free price.
VAT rate or tax share?
"VAT rate 21%" and "tax as a share of the price 34%" call for different calculations: ÷ 1.21 in the first case, × 0.66 in the second. The column header decides.
The rate of another year
When the table gives several years of exchange rates, the conversion must use the year of the amount.
With the EPSO calculator
For VAT, divide once by (1 + rate): 3.50 ÷ 1.21. For a conversion, write the direction on the notepad ("CZK → EUR: ÷ 25") before typing.
Practise this calculation
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Frequently asked questions
How do I remove VAT from a price in EPSO tests?
Divide the price including VAT by (1 + VAT rate). Subtracting the VAT percentage from the gross price gives a wrong, lower figure.
How do I convert with a rate given as "1 EUR = x"?
From the other currency to euros, divide by x; from euros to the other currency, multiply by x.