Tax Type
Retail Sales and Use Tax
Description
Photography; Fees for reproduction of photos
Topic
Taxability of Persons and Transactions
Date Issued
12-15-1995
December 15, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This is in response to your letter of October 3, 1995 on behalf of an unidentified client **********(the "Taxpayer") regarding the application of the tax to the licensing of photographic images for reproduction.
FACTS
The Taxpayer owns the rights to pictures and other photographic images and licenses the right to print these images to publishers of newspapers, books, and magazines. Publishers obtain the photographic image in one of three ways. One method is for the Taxpayer to provide the publisher with a slide of the image which the publisher reproduces and then returns to the Taxpayer. In other cases, the publisher obtains the image from another publication. In these cases, the publisher must still pay the Taxpayer for the right to reproduce the image. A third method, which you indicate is most commonly used, is for the publisher to access the Taxpayer's computer library and download the image electronically.
In each case, the right to use the image is only for the specific use as licensed, and the image cannot be used for other purposes. Also, the cost to obtain the right to use the Taxpayer's image is based on the circulation of the publisher's book or periodical.
RULING
The term "sale" is defined in Code of Virginia 58.1-602 to mean:
-
- Any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property and any rendition of a taxable service for a consideration....
- Any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property and any rendition of a taxable service for a consideration....
Slides: When the Taxpayer furnishes a slide of the image to publishers, the Taxpayer is providing tangible personal property and must therefore charge the tax on the licensing fee. It is of no consequence that the slide must be returned to the Taxpayer. As noted above, a sale means a transfer of title or possession of tangible property.
Images from other sources: As discussed above, a taxable transaction is deemed to take place when someone licenses to another the right to use a photographic image and in connection therewith provides to the licensee the image in tangible form. The same is not true, however, when the licensee is authorized to merely copy an image already in his possession. The tax does not apply to this transaction because there is no transfer of tangible personal property.
Computer library images: The department has also determined that the electronic transfer of information does not constitute a taxable transfer of tangible personal property. See, for example, Public Document 88-299 (10/31/88). Therefore, no tax applies when publishers obtain the images electronically by downloading from the Taxpayer's database.
I trust that this information answers your concerns. However, please contact ********* in my Office of Tax Policy at ******** if you have any questions.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10549I
Rulings of the Tax Commissioner