In this article
- What’s taxable in Virginia?
- What are non-taxable/exempt items in Virginia?
- Do you have sales tax nexus in Virginia?
- Sales tax rates in Virginia
- How to calculate sales tax in Virginia
- How does Virginia sales tax work with marketplaces?
- Sales tax on shipping charges in Virginia
- Sales tax holidays
- How to register for a Virginia sales tax permit
- Sales tax guides for other states
Whether you’ve fully set up shop in Virginia, or simply ship there once in a while, it’s important you know whether your business is liable to their sales taxes. In our experience helping online businesses comply with taxes, we’ve found that tax policies are confusing. So we've translated information from Virginia's official retail sales tax resources into language that’s easy to understand.
This guide will tell you everything you need to know, plus direct you to the right places for handling any sales tax responsibility you may have.
What’s taxable in Virginia?
In Virginia, sales tax is levied on the sale of tangible goods and some services. The tax is collected by the seller and remitted to state tax authorities. Below is an overview of products and services that are generally taxable in Virginia.
- Tangible personal property: These are physical items, unless an exemption applies.
- Certain services.
- Food for home consumption and certain personal hygiene items are taxed at a state rate of 1%.
To be absolutely clear about which products and services are subject to sales tax, and which are exempt, check the Virginia Retail Sales and Use Tax Page.
What are non-taxable/exempt items in Virginia?
Virginia has a number of sales tax exemptions. Here are a few examples of non-taxable items that you don't need to charge Virginia sales tax on:
- Over-the-counter and prescription drugs and medicines.
- Gun safes costing $1,500 or less.
- Software as a Service (SaaS).
Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.
Do you have sales tax nexus in Virginia?
The word “nexus” refers to a commercial connection in the state. Nexus determines the following questions for a state tax agency: do you do business here, what kind, and how much? And when you do have nexus, that means you’re obligated to collect tax on your sales there. So the first question for you to answer is whether you have nexus in Virginia.
Virginia physical nexus
You probably have physical nexus in Virginia if any of the following points describe your business:
| Nexus Trigger | Description | |--------------------|----------------------------------------------------------------------------------------------------------------------------------| | Physical Location | An office or place of business, ownership of personal property, or leased property. | | Employees | An employee or contractor present in the state. | | An Affiliate | Your business (even if out of state) has ties to business affiliates in the state that engage in specified operations. | | Stored Inventory | This includes merchandise owned by Fulfillment by Amazon (FBA) merchants and stored in Virginia in a warehouse owned or operated by Amazon. |
Virginia economic nexus
- A significant amount of sales in Virginia within twelve months. This is called an economic nexus, a sales tax nexus determined by economic activity, i.e. – the amount of sales you make in a particular state, not including sales through a marketplace.
- The threshold in Virginia is more than $100,000 in gross retail sales or 200 or more transactions into the state during the previous or current calendar year. Sales you make through a marketplace are not included in this total.
To learn more about how this works, check out Virginia’s Remote Sellers Page.
Sales tax rates in Virginia
Virginia’s general state sales tax rate is 5.3%. Local jurisdictions can range from 0% to 2.7%. The state rate on groceries and certain personal hygiene items is 1%.
| Tax Type | Rate | |--------------------------------------------------|---------------------------------------| | General State Sales Tax Rate | 5.3% | | Local Jurisdictions Tax Rate | Ranges from 0% to 2.7% | | State Rate on Groceries and Certain Hygiene Items| 1% |
Check out Quaderno's Sales Tax Calculator to see your product’s tax rate, amount, and final price in Virginia.
How to calculate sales tax in Virginia
Virginia has an origin-based sales tax. This means you’re responsible for applying the sales tax rate determined by the ship-from address on all taxable sales. If you have more than one location in Virginia, then charge the sales tax rate of where the sale occurred.
For additional information, see 23VAC10-210-2070. Situs of Sale.
How does Virginia sales tax work with marketplaces?
Marketplace facilitators are responsible for collecting and remitting sales tax on behalf of marketplace sellers in Virginia. If all of your sales in Virginia are conducted through a marketplace facilitator’s platform, you generally do not need to register to collect Virginia sales tax. However, remote sellers that make sales through marketplaces and other channels may have a sales tax collection obligation for their non-marketplace sales.
Sales tax on shipping charges in Virginia
Virginia doesn’t apply sales tax to any shipping costs, as long as the shipping costs are clearly listed and separated from the price of the item(s) you’re selling. Be sure to always mark the cost of the product and the cost of the shipping on two different lines of the bill.
Sales tax holidays
Virginia recognizes an annual sales tax holiday in August. This holiday eliminates sales tax on qualifying school supplies, clothing, footwear, and hurricane/emergency preparedness items.
For more details, see the Virginia Sales Tax Holiday Page.
How to register for a Virginia sales tax permit
Remote sellers register for a Virginia sales tax permit either online or via paper form, depending on whether the business has a Federal Employer Identification Number (FEIN or EIN).
Businesses with an EIN can register via Virginia Tax Online Services, an online tax portal. (This portal is also where you’ll file and pay your tax returns. For information on how to file, check out this Virginia sales tax filing guide.)
Other businesses must register by filling out a form and mailing or faxing it to the Virginia Comptroller office. You’ll find more information below.
Businesses with an EIN
The first step is to register for a sales tax permit. This is a really simple process! But before you begin, have this information handy:
- Your Social Security number
- Your EIN
- North American Industry Classification System number. Each number is a 2-6 digit code. Find yours in the NAICS directory.
Register for a seller’s permit
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Go to the Virginia Tax Online Services site and click the option that says “Are you a new Business? Register Here”
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Fill out all the fields requested in order to access the registration form. This includes creating a User ID and password to log into the Virginia Tax Online Services portal in the future.
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From this point forward, simply provide all the information requested in the form. Here’s a handy checklist from Virginia Tax.
When you complete your registration, you’ll receive:
- Your Virginia Tax account number
- Your sales tax certificate of registration
- An assigned tax filing frequency: monthly, quarterly, or yearly.
You’ll also receive all the information you need to access your business online services account. This is where you’ll be able to file and pay taxes, send secure emails, and manage your Virginia Tax account.
Businesses without an EIN
In summary, the registration process is pretty simple! You must fill out Form R-1, Virginia Department of Taxation Business Registration Form and either fax the application to (804) 367-2603 or mail it to:
Virginia Department of Taxation Registration Unit P.O. Box 1114 Richmond, VA 23218-1114
However, the form requires a lot of information, so it’s worth looking through and gathering all the necessary documents and data ahead of time.
It will take a few weeks to receive your sales tax certificate, your Virginia Tax number, and login instructions for your online business account. When you do, you’ll also be assigned a filing frequency: monthly or quarterly.
Head to enroll in Business iFile to set up your access to the online portal! This is where you’ll be able to file and pay taxes, send secure emails, and manage your Virginia Tax account.
Sales tax guides for other states
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the tax authorities.