“Custodial Taxes” is a term used to describe taxes collected from consumers by businesses. The business holds the collected funds in trust for the County until they are remitted to the County Treasurer.
Short-Term Rental Taxes
- Certain rental businesses may be eligible for special treatment that exempts their rental property from business tangible property taxes and assigns them a low business license tax rate. These businesses collect a 1 percent pass-through tax on all short-term rental receipts.
- As an ongoing business, you must submit an Application for Certification as a Short-Term Rental Business annually on or before February 1. If starting a new business, the Application must be submitted within 30 days of opening the new business.
- You must submit your short-term rental tax reports quarterly on or before the 20th of April, July, October and January.
- Arlington County Code, Chapter 64 provides more information on Short-Term Rental Taxes.
Transient Occupancy (Lodging) Taxes
Transient Occupancy Tax (TOT) is an 8.25% tax rate on the total cost paid for each room or space rented in any hotel, motel, or tourist home, and occupied by the same individual for less than 30 consecutive days. The 8.25% rate includes the 5% local County TOT, the 0.25% local tourism TOT, and the 3% state regional TOT (this tax rate increased from 2% effective May 1, 2021).
For more information on TOT, please see Arlington County Code, Chapter 40 , and Code of Virginia §58.1-1743.
Meals, Food & Beverage Taxes
- Sellers of prepared meals and beverages (but not grocery items) sold or prepared in Arlington must collect a 4 % “Meals, Food and Beverage Tax.” The tax is generally levied on the sale of food and beverages, including alcoholic beverages, whether consumed on or off-premises. (Exceptions include soft drinks served without food on-premises and alcohol sold in sealed containers for off-premises consumption.) This 4% tax is in addition to the appropriate state and local sales taxes.
- Restaurants or caterers who prepare and sell meals specifically for commercial airlines charge a 2 % food and beverage tax.
- If you’re the owner of a new restaurant or other food establishment, you must file a Certificate of Registration Form with the Commissioner of Revenue’s Business Tax Division before the commencement of your business.
- Sellers collect these taxes and remit them to the County, along with the Meals Tax Filing Form, on the 20th of each month, and they must cover the taxes required to be collected by the sellers during the previous calendar month.
Note, the exemptions from the Meals, Food and Beverage Tax are much narrower than the exemptions from the State Sales Tax. Most nonprofits, for example, are NOT exempt from paying Meals Tax even though they may be exempt from Sales Tax. If in doubt about an exemption, restaurants and caterers should contact the Commissioner’s office.
- A Health License is required for new food establishments or whenever there is a change of ownership, and the license must be renewed annually. For more information, visit the Permits and Licenses area in the Department of Human Services.
- Arlington County Code, Chapter 65 provides more information on Meals, Food and Beverage taxes.
Cigarette Taxes
- Wholesalers who distribute cigarettes to Arlington’s retail businesses collect a monthly Cigarette Tax. The tax rate is $0.30 on each pack of 20 cigarettes and $0.375 for on each pack containing 25 cigarettes.
- After the wholesalers collect the taxes, they remit them to the County, along with a Cigarette Tax Report, on the 20th of each month, and they must cover the taxes required to be collected by the wholesaler during the previous month.
- Arlington County Code, Chapter 39 provides more information on the local Cigarette Tax.
For more information on custodial taxes, contact the Commissioner of Revenue’s Business Tax Division at 703-228-3060.