Terms used in the Rental Tax have the same meaning as those used in the Retail Sales and Use Tax, unless defined otherwise, as follows:
"Daily rental vehicle" means a motor vehicle, except a motorcycle or a manufactured home as defined in § 46.2-100, used for rental as defined herein and for the transportation of persons or property, whether on its own structure or by drawing another vehicle or vehicles. (Source: Va. Code § 58.1-1735)
"Gross proceeds" means the charges made or voluntary contributions received for the rental of a motor vehicle where the rental or lease agreement is for a period of less than 12 months. This includes charges for any services that are part of the rental agreement or any separate charges relating to the agreement as well as charges for collision coverage or waiver of property damage, public liability, or other forms of potential liability for the customer. However, gross proceeds does not include: 1) cash discounts allowed and actually taken on a rental contract; 2) finance charges, carrying charges, service charges, or interest from credit given on a rental contract; 3) charges for motor fuels; 4) charges for optional accidental death insurance, unless the charge contains other taxable charges which are not separately stated; 5) Motor Vehicle Sales and Use Tax; 6) charges for violations, citations, or fines and related penalties and fees; 7) delivery charges, pickup charges, recovery charges, or drop charges; 8) pass-through charges; 9) transportation charges; 10) third-party service charges; 11) refueling surcharges and 12) the Rental Tax. (Source: Va. Code § 58.1-1735)
"Manufactured home" means a structure, subject to federal regulation, transportable in one or more sections, which in the traveling mode is eight body feet or more in width or 40 body feet or more in length, or, when erected on site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air conditioning, and electrical systems contained therein. (Source: Va. Code § 46.2-100)
"Mobile office" means an industrialized building unit not subject to federal regulation, which may be constructed on a chassis for the purpose of towing to the point of use and designed to be used with or without a permanent foundation, for commercial use and not for residential use; or two or more such units separately towable but designed to be joined together at the point of use to form a single commercial structure, and which may be designed for removal to, and installation or erection on, other sites. (Source: Va. Code § 58.1-1735)
"Motor vehicle" means every vehicle, except for a mobile office as herein defined, that is self-propelled or designed for self-propulsion and every vehicle drawn by or designed to be drawn by a motor vehicle, including manufactured homes as defined in § 46.2-100 and every device in, upon, and by which any person or property is, or can be, transported or drawn upon a highway, but excepting devices moved by human or animal power, devices used exclusively upon stationary rails or tracks, and vehicles, other than manufactured homes, used in the Commonwealth but not required to be licensed by the Commonwealth. (Source: Va. Code § 58.1-1735)
"Rental" means the transfer of the possession or use of a motor vehicle, whether or not the motor vehicle is required to be licensed by the Commonwealth, by a person for a consideration, without the transfer of the ownership of such motor vehicle, for a period of less than 12 months. Any fee arrangement between the holder of a permit issued by the Department of Motor Vehicles for taxicab services and the driver or drivers of such taxicabs shall not be deemed a rental under this section. Any fee arrangement between a licensed driver training school and a student in that school, whereby the student may use a vehicle owned or leased by the school to perform a road skills test administered by the Department of Motor Vehicles, shall not be deemed a rental under this section. (Source: Va. Code § 58.1-1735)
"Rental in the Commonwealth" means any rental where a person received delivery of a motor vehicle within the Commonwealth of Virginia. The term "Commonwealth" shall include all land or interest in land within the Commonwealth owned by or conveyed to the United States of America. (Source: Va. Code § 58.1-1735)
"Rentor" means a person engaged in the rental of motor vehicles for consideration. (Source: Va. Code § 58.1-1735)
Changes to the Administration of the Rental Tax
Administration of the Rental Tax regarding transactions occurring prior to July 1, 2012, is handled by DMV. Effective July 1, 2012, the Rental Tax is administered by the Department.
Taxes and fees are levied on the gross proceeds from the rental of motor vehicles in Virginia. The taxes are comprised of a four percent tax as well as a four percent additional tax and two percent fee on daily rental vehicles.
The four percent tax is a state tax and is levied on the gross proceeds from the rental in Virginia of all motor vehicles with a gross vehicle weight rating or a gross combination weight rating of 26,000 pounds or less.
Both the four percent additional tax and the two percent fee are levied on the gross proceeds from the rental in Virginia of any daily rental vehicle. The four percent additional tax and the two percent fee are in addition to, and not in lieu of, the four percent tax.
The following table is provided to clarify the tax and fee structure by listing certain types of vehicles and the taxes that apply: