Arlington offers locational advantages for a corporation considering expansion or relocation to office space in the Washington region in terms of tax savings. Arlington Economic Development retained RCLCO (Robert Charles Lesser & Co.) to conduct a study that compares the impact of taxation and other occupancy costs for office tenants in specific Washington, D.C. area submarkets.
The following is a brief overview of the most common state and local business taxes that may apply to your business:
All domestic and foreign corporations registered with the Virginia State Corporation Commission must file a corporate income tax return with the state. Public service corporations, banks, trust companies, credit unions, and insurance companies pay taxes in lieu of the corporate income tax. S-corporations are required to file a return but do not pay a tax. Nonprofits are required to file only if they incurred unrelated business taxable income at the federal level. Corporations engaged in multi-state activities pay a tax only on the portion of their income from Virginia resources.
All corporations authorized to transact business in Virginia must pay an annual registration fee ranging from $100 to $1,700, depending on the number of shares. Non-stock corporations organized after 1970 pay $25.
A seller is subject to the sales tax imposed on gross receipts from all retail sales (sales made for any purpose other than for resale) and leases of tangible personal property (equipment, furniture, supplies, etc.).
Employers who pay wages to one or more employees must deduct and withhold state income tax from such wages. Employers are required to register with the Virginia Department of Taxation.
Employers with at least three employees must purchase and maintain workers’ compensation insurance with a private carrier, hold a certificate of self-insurance issues by the Virginia Workers’ Compensation Commission, or be a member of a licensed group self-insurance association.
Virginia levies an unemployment tax on employers who employ one or more persons for 20 or more weeks in the calendar year. The employer pays the tax into a state fund from which unemployment benefits are distributed.
Contact the Virginia Department of Taxation to see if your business is required to pay miscellaneous business taxes such as the commodities tax, soft drink excise tax, tire tax, forest products tax, etc.
The Commissioner of Revenue assesses Arlington County business privilege license taxes on business conducted in Arlington County, including home-based businesses. New businesses must apply for the initial business license prior to opening or conducting their business activities. It is unlawful to engage in any business without first obtaining a business license. Applications for renewals of licenses by existing businesses must be filed by March of each year.
Arlington County levies a tax on tangible personal property located in Arlington on January 1 and used in a trade or business. This includes items such as furniture, fixtures, machinery, tools, and programmable computer equipment. Businesses must itemize personal property and/or equipment, giving its date of acquisition and original purchase price. You must file a return by May 1; payment is due by September 5. Business tangible personal property tax is not prorated if you should cease business during the year.
All property, except that specifically exempt, is subject to taxation according to a uniform rate. Property is assessed at the local level on the basis of 100% of fair market value as of January 1st each year.
Arlington levies a supplementary sales tax to food and beverages (including alcohol) sold by restaurants, caterers, carry-outs, delis, ice cream parlors, food carts, prepared food sellers, pizza and other food deliveries whether consumed on or off-premises. The tax does not apply to grocery items.
Arlington levies a tax on charges made by hotels, tourist homes, and motels that offer accommodations on a short-term basis.
Owners of personal vehicles as well as those used for commercial use that are garaged in Arlington are required to file a personal property tax return.
Additional tax information: