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Sales of digital products are exempt from the sales tax in Virginia.
Virginia does not usually collect sales taxes on services. However, services which considered part of the physical merchandise purchased, as valued is money or in (such as setup of a purchased piece of machinery)seen as being taxable. Some services are entirely taxable.
Subscriptions to use online-hosted software are not taxable. Charges for maintenance or upgrades to online hosting software are not taxable, even if separately stated. Digital products are products provided to a customer electronically.
The Taxpayer is correct that the sale of software delivered electronically to customers does not constitute the sale of tangible personal property and is generally not subject to Virginia sales and use taxation.
Electronically Delivered Software The Virginia Department of Revenue has maintained a long-standing policy, which is referenced in Virginia Public Document Ruling No. 05-44 , that sales of software delivered electronically do not constitute the sale of tangible personal property and are not subject to sales tax.
Yes. Retail sales tax applies to a service contract or warranty sold to a consumer (WAC 458-20-257).
Because downloadable prewritten software is not identified as tax-exempt, it is treated as generally taxable regardless of how it is transferred or delivered to the purchaser.
In the state of Virginia, any maintenance contracts that provide only repair labor are considered to be exempt. Any contracts that provide both parts and labor are definitely subject to tax on one-half the total charge for the contract. Contracts which provide only parts are considered to be taxable.
Charges for services generally are exempt from the retail sales and use tax. However, services provided in connection with sales of tangible personal property are taxable.
Charges for services generally are exempt from the retail sales and use tax. However, services provided in connection with sales of tangible personal property are taxable.