diff --git a/app/models/invoice.rb b/app/models/invoice.rb
index d78c24d07..7dd8bbe67 100644
--- a/app/models/invoice.rb
+++ b/app/models/invoice.rb
@@ -32,8 +32,8 @@ class Invoice < ActiveRecord::Base
   validates :vat_rate, numericality: { greater_than_or_equal_to: 0, less_than: 100 },
             allow_nil: true
 
-  after_initialize :apply_defaults
   before_create :set_invoice_number
+  before_create :apply_default_vat_rate, unless: :vat_rate?
 
   attribute :vat_rate, ::Type::VATRate.new
   attr_readonly :vat_rate
@@ -156,7 +156,7 @@ class Invoice < ActiveRecord::Base
 
   def vat
     return 0 unless vat_rate
-    (sum_without_vat * vat_rate).round(2)
+    sum_without_vat * vat_rate / 100
   end
 
   def sum
@@ -165,7 +165,7 @@ class Invoice < ActiveRecord::Base
 
   private
 
-  def apply_defaults
-    self.vat_rate = buyer.effective_vat_rate unless vat_rate
+  def apply_default_vat_rate
+    self.vat_rate = buyer.effective_vat_rate
   end
 end
diff --git a/app/views/registrar/invoices/partials/_items.haml b/app/views/registrar/invoices/partials/_items.haml
index 64fc71786..eef06c1ce 100644
--- a/app/views/registrar/invoices/partials/_items.haml
+++ b/app/views/registrar/invoices/partials/_items.haml
@@ -24,7 +24,7 @@
         %td= currency(@invoice.sum_without_vat)
       %tr
         %th.no-border{colspan: 3}
-        %th= t('vat', rate: (@invoice.vat_rate * 100).round)
+        %th= t('vat', rate: number_to_percentage(@invoice.vat_rate, precision: 1))
         %td= currency(@invoice.vat)
       %tr
         %th.no-border{colspan: 3}
diff --git a/app/views/registrar/invoices/pdf.haml b/app/views/registrar/invoices/pdf.haml
index 6f92c4a8a..a5f035fe0 100644
--- a/app/views/registrar/invoices/pdf.haml
+++ b/app/views/registrar/invoices/pdf.haml
@@ -242,7 +242,7 @@
                   %td= "#{currency(@invoice.sum_without_vat)} #{@invoice.currency}"
                 %tr
                   %th.no-border{colspan: 3}
-                  %th= t('vat', rate: (@invoice.vat_rate * 100).round)
+                  %th= t('vat', rate: number_to_percentage(@invoice.vat_rate, precision: 1))
                   %td= "#{currency(@invoice.vat)} #{@invoice.currency}"
                 %tr
                   %th.no-border{colspan: 3}
diff --git a/config/locales/en.yml b/config/locales/en.yml
index 19f62fe3f..73045367b 100644
--- a/config/locales/en.yml
+++ b/config/locales/en.yml
@@ -543,7 +543,7 @@ en:
   invoice_number: Invoice no.
   seller: 'Seller'
   prepayment: 'Prepayment'
-  vat: 'VAT (%{rate}%)'
+  vat: 'VAT (%{rate})'
   unpaid: 'Unpaid'
   your_current_account_balance_is: 'Your current account balance is %{balance} %{currency}'
   billing: 'Billing'
diff --git a/test/models/invoice/vat_rate_test.rb b/test/models/invoice/vat_rate_test.rb
index 27bc4b705..d1e892b72 100644
--- a/test/models/invoice/vat_rate_test.rb
+++ b/test/models/invoice/vat_rate_test.rb
@@ -35,17 +35,22 @@ class InvoiceVATRateTest < ActiveSupport::TestCase
 
   def test_vat_rate_defaults_to_effective_vat_rate_of_a_registrar
     registrar = registrars(:bestnames)
+    invoice = @invoice.dup
+    invoice.vat_rate = nil
+    invoice.buyer = registrar
+    invoice.invoice_items = @invoice.invoice_items
 
-    registrar.stub(:effective_vat_rate, 55) do
-      invoice = Invoice.new(buyer: registrar)
-      assert_equal 55, invoice.vat_rate
+    registrar.stub(:effective_vat_rate, BigDecimal(55)) do
+      invoice.save!
     end
+
+    assert_equal BigDecimal(55), invoice.vat_rate
   end
 
   def test_vat_rate_cannot_be_updated
-    @invoice.vat_rate = 21
+    @invoice.vat_rate = BigDecimal(21)
     @invoice.save!
     @invoice.reload
-    refute_equal 21, @invoice.vat_rate
+    refute_equal BigDecimal(21), @invoice.vat_rate
   end
 end