Virginia Economic Nexus Sales Tax Standard

Last Updated on December 28, 2021

Virginia enacts an economic nexus sales tax standard requiring remote sellers and marketplace facilitators to collect retail sales and use tax if they meet certain economic thresholds. The provisions are effective July 1, 2019.  Remote sellers and marketplace facilitators are required to register, collect and remit retail sales and use if they have:

• more than $100,000 in annual gross revenue from sales in Virginia; or
• at least 200 separate sales transactions in Virginia.

A marketplace facilitator has sufficient activity with Virginia to require tax registration if it meets at least one requirement in each of the following three categories:

1. It engages through a commonly controlled person in any of the following activities:

• Transmitting or communicating an offer or acceptance between a purchaser and a marketplace seller;
• Owning or operating the infrastructure, whether electronic or physical, or technology that brings purchasers and marketplace sellers together; or
• Providing a virtual currency that purchasers are allowed or required to use to purchase products from the marketplace seller;

2. It engages in any of the following activities with respect to a marketplace seller’s products:

• Payment processing;
• Fulfillment or storage;
• Listing products for sale;
• Setting prices;
• Branding sales as those of the marketplace facilitator; or
• Providing customer service or accepting or assisting with returns or exchanges; and

3. It establishes economic nexus through the same $100,000 in gross revenue or 200 transactions per year standard that applies to remote sellers.

How will the Economic Nexus Standard Impact Virginia Sellers?

“Marketplace facilitator” means a person that contracts with a marketplace seller to facilitate, for consideration and regardless of whether such consideration is deducted as fees from transactions, the sale of such marketplace seller’s products through a physical or electronic marketplace operated by such person.

Also, it means a person that is not a commonly controlled person to a marketplace facilitator and that makes sales through any physical or electronic marketplace operated by such marketplace facilitator, even if such seller would not have been required to collect and remit sales and use tax had the sale not been made through such marketplace.

“Marketplace facilitator” does not include a payment processor business appointed by a merchant to handle payment transactions from various channels, such as credit cards and debit cards, and whose sole activity with respect to marketplace sales is to handle transactions between two parties. Also, it does not include a platform or forum that exclusively provides Internet advertising services, including any advertisements that may list products for sale, so long as such platform or forum does not also engage directly or indirectly through one or more commonly controlled persons.