Rental Tax

Definition

Rental taxes and a 2% rental fee are levied on the gross proceeds from the rental of motor vehicles in Virginia. Individuals and companies who rent motor vehicles to others for a period less than twelve months must collect the rental taxes and the 2% rental fee and file rental tax returns with DMV.

Registration Requirements

Individuals or companies that rent motor vehicles are required to register as a rentor and obtain a certificate of registration. The certificate of registration authorizes the individual or company to collect rental tax, additional tax, the rental tax fee, and exempts rental vehicles from the vehicle sales and use tax.

To register, submit a Motor Vehicle Rental Tax Application (RT-423) and a copy of your business license (if required by the locality). There is no application fee.

Other Requirements

The individual or company must also maintain records of all rental transactions, file monthly tax returns with DMV, and submit the appropriate rental taxes and 2% rental fee for the vehicles rented each month.