The Virginia Retail Sales and Use Act establishes a tax on the sale, lease or rental of tangible personal property or the use or consumption of tangible personal property in Virginia, as well as taxable services in Virginia.
A seller is subject to the sales tax imposed on gross receipts from retail sales. "Retail sales" means sales made for any purpose other than for resale. The tax may also apply to the furnishing of transient accommodations and the lease or rental of personal property. Code of Virginia § 58.1-603.
The seller is responsible for collecting the tax from the customer on each taxable sale. The tax must be separately stated and added to the sales price or charge.
Sales tax rates
- The general sales tax rate for Virginia is 5.3% (4.3% state tax and 1 % local tax).
- Northern Virginia and Hampton Roads regions - There is an additional 0.7% state tax imposed in the localities that make up Northern Virginia and Hampton Roads, making the rate in these areas 6% (5% state tax and 1% local tax).
- Sales of eligible food items are subject to a reduced sales tax rate of 2.5% (1.5% state tax and 1% local tax).
Northern Virginia Region: The additional 0.7% regional rate in Northern Virginia applies to the Cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park; and in the Counties of Arlington, Fairfax, Loudoun, and Prince William.
Hampton Roads Region: The additional 0.7% regional rate in Hampton Roads applies to the Cities of Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg, and the Counties of Isle of Wight, James City, Southampton, and York.
Retail Sales Tax
In-state dealers - Generally, in-state dealers (individuals or businesses) are those making Virginia sales while having one or more physical locations in Virginia. Businesses subject to the Virginia Retail Sales Tax must file a monthly return (Form ST-9), by the 20th of the month after the sales occurred. A return must be filed for each period, even if there are no sales to report. Based on your tax liability, we may change your filing frequency from monthly to quarterly. If your filing frequency is changed, we will notify you prior to the effective date.
Out-of-state dealers refers to individuals or businesses that, in most cases, are physically located outside of Virginia but make qualified sales, leases or rentals into Virginia. If an out-of-state dealer has sufficient nexus with Virginia (meaning a significant connection or link to Virginia according to Virginia law), the dealer must register with Virginia to collect Virginia Use Tax on their Virginia sales. For further information on nexus criteria, refer to Code of Virginia §58.1-612. Out-of-state businesses that do not have sufficient nexus with Virginia may still choose to register with Virginia to collect the tax as a courtesy to their Virginia customers.
Whether required to register or not, any out-of-state dealer registered to collect Virginia use tax must file a monthly return (Form ST-8, Out-of-State Dealers Use Tax) by the 20th of the month after the sales occurred, unless a different filing frequency has been established by Virginia Tax. A return must be filed for each period, even if there are no sales to report.
Based on your tax liability, we may change your filing frequency from monthly to quarterly. If your filing frequency is changed, we will notify you prior to the effective date.
New businesses can register for retail sales and use taxes online or by completing the Business Registration Application (Form R-1). Once registration is complete, businesses receive Form ST-4, Certificate of Registration. The ST-4 must be prominently displayed at the registered location.
If your business is already registered with Virginia Tax, and you need to add the tax type to your registration, log in to your Business Online Services Account and add the new tax type. If you don't have an online services account, enroll now.
Returns must be filed by the 20th of the month, even if there are no sales to report.
Electronic filing requirement
New for July 1, 2017: Out-of-state dealers must file Form ST-8 and all required schedules electronically, starting with the Aug. 20 return for monthly filers (Oct. 20 return for quarterly filers). Businesses were already required to file Form ST-9 and all required schedules electronically.
To meet the electronic filing requirement, you can file your return, required schedules, and payments using any of our free electronic filing options:
ACH credit. You can also make payments separately using ACH credit. Your bank may charge a fee for this service. Find detailed instructions about initiating ACH credit transactions in our electronic payment guide.
Temporary Waiver of Electronic Filing Requirement
If you are unable to file and pay electronically, you must submit an electronic filing waiver request. Waivers are temporary and must be renewed annually.
Direct Pay Permit
A Direct Payment Permit allows certain companies to purchase goods without paying the sales or use tax at the time of purchase. These companies agree to pay the tax due directly to Virginia Tax, and allocate the local tax so that no county or city will lose any revenue. Direct Payment Permits are typically issued to manufacturers, contractors, or mine operators that store tangible personal property within the commonwealth for use both in and outside of Virginia.
Businesses who meet the qualifications set forth in Code of Virginia § 58.1-624 may apply to the Tax Commissioner for a permit. If approved, the business would file form ST-6.
A discount on the amount of sales tax due is allowed when eligible businesses file and pay the tax in a timely manner. Dealers can keep a portion of the tax they have collected; however, the discount is not allowed on the local portion of the tax. In addition to the retail sales and use tax, a dealer's discount is available for the following taxes:
- Vending Machine Tax
- Digital Media Fee
- Tobacco Products Tax
- Motor Vehicle Fuel Sales Tax
Penalty and Interest
If you fail to file or pay the full amount of sales tax due by the due date, a penalty of 6% per month is added to the tax owed. The maximum penalty is 30%. The minimum penalty is $10. The minimum penalty applies to late returns even if there is no tax owed.
Interest is added at the federal underpayment rate plus 2% and accrues on the tax until paid.
Exemptions and Exceptions
In general, all sales, leases, and rentals of tangible personal property, as well as accommodations and certain taxable services, are subject to Virginia Sales and Use Tax, unless an exemption or exception is established.
There are specific instances where a tax exemption may apply without the need of an exemption certificate. Some common exemptions and exceptions to the retail sales and use tax are:
In many cases, in order to sell, lease, or rent tangible personal property without charging sales tax, a seller must obtain a certificate of exemption from the buyer. The sales-for-resale exemption prevents tax from being charged multiple times on the same item. The sales tax is intended to be applied to the final retail sale to the consumer. Therefore, the exemption prevents the tax being applied on goods as they are distributed before being sold at retail.
A dealer who makes a sale without charging applicable sales tax must retain a copy of the exemption certificate on file to substantiate the sale was indeed tax exempt under the law.
Virginia Sales and Use Tax Dealer Lookup
If your business is registered as a retail sales tax dealer with us, you can use the new Virginia Sales and Use Tax Dealer Lookup through your online business account to verify that a business providing you with a sales tax exemption certificate is currently registered as a retail sales tax dealer in Virginia. If you don’t have an account, you’ll need to create one to use the tool. You can also call Customer Services at 804.367.8037 to check.
Cigarette Resale Exemption Certificates
Cigarette Resale Exemption Certificates (Form ST-10C) are newly created Virginia Tax-issued exemption certificates used to purchase cigarettes bearing Virginia revenue stamps for resale in the Commonwealth that are exempt from retail sales and use tax.
All Cigarette Resale Certificates of Exemption must be signed by and bear the name and address of the taxpayer; indicate the number of the certificate of registration issued to the taxpayer; and be in the form the Tax Commissioner has prescribed.
For more information, see the Cigarette Resale Exemption Guidelines.
Forms ST-10 and ST-10C
Beginning Jan. 1, 2018, Form ST-10C will replace the existing Form ST-10 for purchases of cigarettes for resale in Virginia. You will still use Form ST-10 for all other items. If you purchase cigarettes and other items for resale in one transaction, you must present both Form ST-10C and Form ST-10.
Cigarette Resale Exemption Certificate Application Process
Beginning Jan. 1, 2018, any retail or wholesale dealer making a tax-exempt purchase of cigarettes for resale must have a Form ST-10C Certificate of Exemption.
We will issue the new cigarette resale exemption certificate to qualifying dealers purchasing cigarettes for resale in Virginia, who apply for it and pass a background investigation. If you have not already received Form ST-10C, you must apply and be approved on or before Dec. 31, 2017.
Include a $50 non-refundable fee with the application. The $50 fee can be waived if your business qualifies for the expedited process explained in the application.
We will not issue a cigarette resale exemption certificate to an applicant until at least 30 days after the date that the application was submitted, unless dealers qualify for the expedited certificate process.
Using Form ST-10C
Present Form ST-10C to purchase cigarettes for resale in Virginia only. You may not claim an exemption for cigarettes that will be taken out of Virginia.
Keep records of all purchases made with your Form ST-10C as well as records of your sales of cigarettes.
If you close or move your business, notify Virginia Tax immediately.