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Virginia Extends Sales Tax Exemptions to Tenants of Data Centers


Virginia passed Senate Bill 112 (Chapter 613), a law which expands the exemptions for equipment purchased for use in computer data centers to data center tenants. 

Chapter 613 amends Virginia code § 58.1-609.3 in two ways. First, it adds data center tenants alongside data center operators as individuals who can help data centers meet the qualifications for exemption. According to § 58.1-609.3, a data center must meet the following criteria for the right to purchase equipment without paying sales tax:

  1. The center must be located in Virginia.
  2. The center must result "in a new capital investment on or after January 1, 2009, of at least $150 million;
  3. and [result] in the creation on or after July 1, 2009 of at least 50 new jobs by the data center operator and the tenants of the data center collectively  . . . " (Italics added by Chapter 613).

Second, Chapter 613 includes data center tenants among those who can purchase equipment at an exempt price, provided the data center meets the above requirements.

Equipment that qualifies for exemption includes ". . . computer equipment or enabling software purchased or leased for the processing, storage, retrieval, or communication of data, including but not limited to servers, routers, connections, and other enabling hardware, including chillers and backup generators used or to be used . . ." in a qualifying data center.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.