Virginia Administrative Code
Title 23 - TAXATION
Agency 10 - DEPARTMENT OF TAXATION
Chapter 210 - RETAIL SALES AND USE TAX
Section 23VAC10-210-840 - Leases or rentals

A. Generally. Any person engaged in the business of leasing or renting tangible personal property to others is required to register as a dealer and collect and pay the tax on gross proceeds. A lessor of tangible personal property whose place of business is outside this state and who leases or rents tangible personal property to Virginia customers is required to register as a dealer and to collect and pay the tax on the gross proceeds. Generally, the tax applies to leases or rentals of machinery and equipment which is leased or rented without an operator.

B. Gross proceeds, defined. "Gross proceeds" means the charges made or voluntary contributions received for the lease or rental of tangible personal property computed with the same deductions, where applicable, as for sales price in 23VAC10-210-4000. The term "gross proceeds" includes any finance or interest charges, insurance charges, charges for property tax on the property being leased, and other similar charges.

Gross proceeds also includes any service charges in connection with the lease of property. For example, if a dealer leases a gas cylinder and in connection with such lease also imposes a $10 "demurrage" charge because the customer fails to return the cylinder within the allotted time, the $10 charge will also be subject to the tax.

C. Property for use in taxable lease or rental. Tangible personal property for future use by a person for taxable lease or rental as an established business may be purchased tax exempt under a certificate of exemption.

D. Exclusions for "lease" or "rental." The term "lease" or "rental" does not include the leasing, renting or licensing of copyright audio or video tapes and films for public exhibition at motion picture theatres or by licensed radio and television stations. Receipts from such "leases" or "rentals" are not subject to the tax.