Data Center Retail Sales & Use Tax Exemption

Virginia offers a data center retail sales and use tax exemption (DCRSUT Exemption) on qualifying computer equipment or enabling software purchased or leased for use in certain data centers in the Commonwealth meeting minimum investment and job creation requirements as outlined below. The DCRSUT exemption is available beginning July 1, 2010, through June 30, 2035, unless the company meets the investment and job creation provisions required for an extension of the DCRSUT outlined further below. Contact Katherine Goodwin 804.545.5794 kgoodwin vedp.org Eligibility The data center may be an enterprise or a colocation data center. Prior to using the DCRSUT Exemption, a data center must enter into a Memorandum of Understanding (MOU) with the Virginia Economic Development Partnership (VEDP) setting forth the terms and conditions of use. The MOU will set forth the data center facilities in the specific Virginia locality for which the data center will purchase or lease qualifying computer equipment or enabling software and will be using the DCRSUT Exemption. A colocation data center will enter into an MOU permitting both the data center and its qualify for and use the DCRSUT Exemption. Statutory Minimum General Eligibility Thresholds: $150 million new capital investment. 50 new jobs located at the data center in the applicable locality and associated with the operation or maintenance of the data center. Each new job must be paid at least 150% of the prevailing annual average wage in the locality where the data center is located, excluding fringe benefits. Statutory Minimum Eligibility Thresholds for Distressed Localities: After July 1, 2023, for a data center in a locality with annual unemployment and poverty rates that were greater than the state average. $70 million capital investment. 10 new jobs associated with the operation or maintenance of the data center in the locality. Each new job must be paid at least 150% of the prevailing annual average wage in the locality where the data center is located, excluding fringe benefits. Extension of the DCRSUT Exemption beyond 2035 requires a data center operator to enter into a MOU with the VEDP on or after January 1, 2023. Eligibility Thresholds for Extension of the Tax Exemption to 2040: $35 billion new capital investment in data centers in localities identified in a memorandum of understanding. 1,000 direct new jobs located at data centers identified in the MOU. At least 100 of the new jobs must be paid at least 150% of the prevailing annual average wage in the locality where the data center is located, excluding fringe benefits. Eligibility Thresholds for Extension of the Tax Exemption to 2050: $100 billion new capital investment in data centers in localities identified in a memorandum of understanding. 2,500 direct new jobs located at data centers identified in the MOU. At least 100 of the new jobs must be paid at least 150% of the prevailing annual average wage in the locality where the data center is located, excluding fringe benefits. The data center and its tenants, as may be applicable, may use the DCRSUT Exemption prior to meeting the statutory minimum capital investment, new job, and wage thresholds subject to the requirement that if such thresholds are not met by a certain performance date, the value of the DCRSUT Exemption received will be repaid to the Commonwealth. The data center and its tenants, as may be applicable, generally must meet the statutory minimum capital investment, new job, and wage thresholds within three years after the data center and VEDP have entered into the MOU.

Eligibility The data center may be an enterprise or a colocation data center.