Aircraft Sales and Use Tax
A tax is imposed on the retail sale of every aircraft sold in Virginia or upon the use of any aircraft in Virginia.
Purchasing of Aircraft
The purchaser of the aircraft must file Form AST-3, Aircraft Sales and Use Tax Return, with Virginia Tax and pay the tax prior to applying for a license with the Department of Aviation. Upon receipt of payment, Virginia Tax will certify payment to the Department of Aviation. Checks should be made payable to the Virginia Department of Taxation. The purchaser of the aircraft must apply for a license with the Department of Aviation.
Aircraft purchased in Virginia and subsequently moved out of Virginia in 60 days or less are not required to be licensed in Virginia and therefore are not liable for the tax.
Commercial dealers have 2 options for paying the Aircraft Sales and Use Tax:
- Any person holding a commercial dealer's license issued by the Department of Aviation may elect to be subject to 2% of the monthly gross receipts from the lease, charter or other use of any aircraft licensed for commercial use. A dealer who desires to be subject to the tax imposed by subdivision 3 of § 58.1-1502 shall notify Virginia Tax in writing of such election prior to registering. To register, complete your application online or use Form R-1 to register by mail.
Dealers whose applications are approved will be required to pay the tax rate of 2% on gross receipts from the lease, charter, or other use of aircraft. Once a dealer makes the election, he or she must file Form AST-2, Dealer's Aircraft Sales and Use Tax Return, and pay the tax monthly on the gross receipts from all taxable transactions during the preceding month. Monthly returns and payments are due on or before the 20th of each month for the preceding month.
- Dealers who do not elect to be taxed at the 2% rate on gross receipts for lease, charter, or other use must pay the Aircraft Sales and Use Tax at the time an aircraft is purchased.
For a current list of qualifying exemptions to the Virginia Aircraft Sales and Use Tax, please refer to Va. Code § 58.1-1505.
The tax rate is 2% of the sales price. If the aircraft is licensed in this state 6 months or more after its acquisition from outside this state, the tax is 2% of the aircraft's current market value or purchase price, whichever is lower.
For more information refer to Va. Code §§ 58.1-1500 through 1510.
Dealer Exclusion and Monthly Returns
For additional assistance with Aircraft Sales and Use Tax, please contact 804.786.2450.
Watercraft Sales and Use Tax
What is it?
A tax on:
- The sale of any watercraft sold in Virginia; or
- Any watercraft not sold in Virginia that has to be titled with the Virginia Department of Game and Inland Fisheries (DGIF) for use in Virginia; or
- Any motor used to power a watercraft, if not purchased with the watercraft; or
- The lease, charter or other compensatory use of a watercraft in Virginia.
- 2% of the purchase price of the watercraft; or
- 2% of the current market value of the watercraft, if it was purchased 6 months or more before it was required to be titled for use in Virginia; or
- 2% of the gross receipts from leasing, chartering or other compensatory use.
The maximum watercraft tax for any transaction is $2,000.
What is a "watercraft?"
- Any vessel propelled by machinery whether or not the machinery is the principal source of propulsion; or
- Any sail-powered boat over 18 feet long measured along the centerline.
Not included in the definition of “watercraft” (for the purpose of this tax):
- Any vessel with a valid marine titling document issued by the United States Coast Guard.
Who owes this tax?
Individuals who purchase watercraft are responsible for the watercraft sales and use tax.
Watercraft dealers are exempt from this tax on vessels purchased for resale (unless you elect to collect it on behalf of your customers,) or on vessels purchased for charter, lease or other compensatory use. Instead, dealers are responsible for the tax on the gross receipts from operating these vessels for charter, etc.
What about the "regular" sales tax?
All transactions subject to the watercraft sales and use tax are exempt from the retail sales and use tax. Seaplanes are subject to the aircraft sales and use tax.
For an updated list of exemptions to the watercraft tax, please refer to Va. Code § 58.1-1404.
How to register
Individuals who purchase a watercraft are not required to register for watercraft sales and use tax with Virginia Tax. See "How to file and pay," below, for information about filing your watercraft sales and use tax return.
Please visit the DGIF website for information about registering your watercraft.
Dealers are required to register with Virginia Tax.
- New businesses. Register online or by mail using the Business Registration Application (Form R-1).
- Existing businesses. If your business is already registered, log in to your Business Account and add the new tax type to your registration. If you don't have an online services account, enroll now. Or, add the new tax type by mail using Form R-1.
How to file and pay
File the Form WCT-3A, Individual Watercraft Tax Worksheet before titling your watercraft with DGIF. You are required to be title your watercraft before you can operate it in Virginia. Pay the tax to either Virginia Tax or DGIF. If you purchase the watercraft from a dealer authorized by agreement to collect the tax, it may be paid to the dealer.
File Form WCT-2, Dealer's Monthly Return of Watercraft Sales and Use Tax monthly. Returns and payments are due on or before the 20th day of the month following the month in which the transactions occurred. The return will show gross receipts from compensatory use of watercraft. The return may also include gross receipts from sales if authorized by agreement with Virginia Tax to collect watercraft tax on behalf of your customers.
For additional information please refer to Va. Code §§58.1-1400 through 58.1-1410.