Sales tax requirements for remote sellers and marketplace facilitators

Under Virginia's economic nexus law, having a physical presence in Virginia is not a prerequisite for having to collect Virginia sales and use tax. A remote seller or marketplace facilitator has economic nexus if they sell or facilitate the sale of more than $100,000 in annual gross retail sales or 200 or more transactions to Virginia customers.

You may qualify as a “remote seller,” a “marketplace seller," or a “marketplace facilitator,” or any mix of the 3 classifications depending on your retail sales activities in Virginia. See the corresponding section below to see what you need to do in each role. 

For more details, refer to the Guidelines for Remote Sellers and Marketplace Facilitators.

What is a marketplace facilitator?

A marketplace facilitator is any business that contracts with a marketplace seller to facilitate the sale of the seller's products through a physical or electronic marketplace, and:

  1. Engages, either directly or indirectly, in any of the following activities:
    • Transmitting or communicating an offer or acceptance between a buyer and a marketplace seller;
    • Owning or operating the infrastructure, electronic or physical, or technology that brings buyers and marketplace sellers together; or
    • Providing a virtual currency that buyers can use to purchase products from the seller; and
  2. Conducts any of the following activities with respect to a marketplace seller's products:
    • Payment processing;
    • Fulfillment or storage;
    • Listing products for sale;
    • Setting prices;
    • Branding sales as those of the marketplace facilitator; or
    • Providing customer service or accepting or assisting with returns or exchanges.

The following types of businesses are specifically excluded from the definition of marketplace facilitator: 

  • A payment processor whose only activity with respect to marketplace sales is to handle payments, and
  • A platform or website that exclusively advertises goods for sale and does not also engage in any of the above activities, either directly or indirectly. 

Do you need to register? 

If you are a marketplace facilitator that sold or facilitated the sale of more than $100,000 in annual gross revenue or 200 or more transactions to Virginia customers in the previous or current calendar year, you must register to collect and pay Virginia sales tax by July 1.

If you also make direct sales, use your combined direct and facilitated sales to determine if you meet the threshold.

How to register

When you register, use the checkbox to identify yourself as a marketplace facilitator. 

If you are already registered with us, you'll need to update your sales tax registration to let us know you're a marketplace facilitator by July 1. Log into your business online services account or fill out the retail sales and use section on Form R-1

Filing and paying

Beginning July 1, you will be responsible for collecting and paying sales tax on behalf of all marketplace sellers for their Virginia sales, unless you qualify for a waiver. If you also sell your own products, you are required to collect sales tax on both facilitated and direct sales. You will need to keep and maintain separate records for your facilitated and direct sales. 

For more information on general retail sales and use requirements, including sales tax rates, see Retail Sales and Use Tax.

Waivers

You can apply for a waiver to collect and remit sales taxes if:

  • All of your marketplace sellers are registered to collect sales tax in Virginia; or
  • A specific marketplace seller has sufficient nexus to register to collect sales tax themselves and collection of the tax would create an undue burden for either party. 

For more information, refer to the Guidelines for Remote Sellers and Marketplace Facilitators.

Waiver process

To apply for a waiver, you will need to first register with us online as a marketplace facilitator.

After you're registered, send us a secure email with your waiver request using the "Marketplace Facilitator" topic from the dropdown menu. 

If you're requesting a waiver because all of your sellers are already registered to collect sales tax, you need to include a complete list of your sellers in your waiver request. See our template (.xlsx) for what you need to provide. 

What is a remote seller?

A remote seller is any dealer that, in the previous or current calendar year, either receives greater than $100,000 in gross revenue from retail sales, or engages in 200 or more separate retail sales transactions, or any software provider acting on behalf of such dealer.

Do you need to register?

Do you sell through a marketplace facilitator only?

If all of your sales in Virginia are conducted through a marketplace facilitator’s platform, you are considered a "marketplace seller" and do not need to register to collect Virginia sales tax. Your marketplace facilitator is responsible for the tax on sales through the marketplace. See the marketplace sellers section for more information.

Do you sell through a marketplace facilitator and another venue, like your own website?

If your annual direct sales to Virginia customers (sales that aren’t made through the facilitator) total more than $100,000 or 200 or more total transactions, you need to register to collect Virginia sales tax. Register online, or complete Form R-1. You will have to begin filing Virginia sales tax returns for your direct sales only. Your marketplace facilitator is responsible for the tax on sales through the marketplace.

Don't sell through a marketplace facilitator at all?

If your annual direct sales to Virginia customers (sales that aren’t made through a marketplace facilitator) total more than $100,000 or 200 or more separate transactions, you need to register to collect Virginia sales tax. Register online or complete Form R-1.

Filing and paying

Beginning July 1, you will be responsible for collecting and paying sales tax on all direct sales to customers in Virginia. For more information on general retail sales and use requirements, including sales tax rates, see Retail Sales and Use Tax.

What is a marketplace seller? 

Marketplace sellers are those who contract with marketplace facilitators to sell their products through the facilitator’s platform.

Do you need to register to collect sales tax? 

  • If all of your sales in Virginia are conducted through a marketplace facilitator’s platform, you generally do not need to register to collect Virginia sales tax. Your marketplace facilitator is responsible for the tax on sales through the marketplace. 
  • However, if you also make sales to Virginia customers outside of a marketplace facilitator’s platform, like through your own website, and you meet the $100,000 or 200 transactions threshold for remote sellers, you will need to register to collect sales tax on your direct sales. See the remote sellers section for more information.

Already registered with us? What changes? 

Out-of-state businesses
  • If you sell exclusively through a marketplace facilitator, after July 1 your facilitator will take care of the tax for you, and you can no longer collect tax on those sales yourself. File your May and June returns as usual, then log into your online services account or file Form R-3 marking yourself as no longer liable for sales tax.
  • If you sell through a marketplace facilitator and another venue, like your own website, and your direct sales to Virginia customers total more than $100,000 per year, or 200 or more transactions per year, continue filing as normal. After July 1, you will be liable for Virginia sales tax only on your direct sales. The marketplace will take care of the tax on your sales through them. See the remote sellers section for more information.
In-state businesses
  • If you sell exclusively through a marketplace facilitator, after July 1 your facilitator will generally take care of the tax for you. File your May and June returns as usual, then log into your online services account or file Form R-3 marking yourself as no longer liable for sales tax. Contact us at 804.367.8037 if you would like to update your account so you can continue using your sales tax exemption certificates.
  • If you sell through a marketplace facilitator and another venue, like your own website or your physical business location, continue filing as normal, but after July 1 calculate the tax due only on your direct sales. Your facilitator will generally take care of the tax on your sales through them.