To purchase an aircraft exempt from the 2% Aircraft Sales and Use Tax for the sole purpose of reselling it, a party must be engaged in the business of manufacturing, distributing, or selling aircraft. This party must also make application to the Department of Taxation’s Commissioner to receive official approval prior to operation of the aircraft under the “dealer exclusion”.
Under the “dealer exclusion”, you must remit a 2% Aircraft Sale and Use Tax (AST-2) to the Department of Taxation on monthly gross receipts.
Aircraft Registration - Not required until aircraft becomes capable of flight.
Aircraft Sales and Use Tax - applies uniformly to operable and inoperable aircraft.
In the case of inoperable aircraft, the time for payment of such tax is postponed until the aircraft is required to be registered.
The 2% Aircraft Sales and Use Tax is a one-time tax that is placed on every aircraft sold and/or operated in the Commonwealth for more than 90 non-consecutive days AND is required to be registered with the Department of Aviation.
The Aircraft Sales and Use Tax is based on the price of the aircraft at the time it was purchased, unlike property tax, which is based on the current value of the property. The Aircraft Sales and Use Tax is ultimately due based on the purchase price of the aircraft, regardless of whether it is later damaged and loses value.
The Aircraft Sales and Use Tax also applies to aircraft kits, parts and accessories when the aircraft becomes airworthy and is required to be registered.
The 2% Aircraft Sales and Use Tax is calculated on the purchase price of the aircraft or on the current market value of aircraft if brought into Virginia six months or more after acquisition and provided the aircraft is required to be registered with the Department of Aviation.
No credit is allowed for trade-ins. In the absence of a bill of sale or other written evidence of purchase price, the Commonwealth of Virginia uses an average retail price to estimate the taxable amount of the aircraft.
The “owner”, either the individual or entity which holds title to the aircraft, is responsible for payment of the Aircraft Sales and Use Tax.
We use the Price Digest’s Aircraft Bluebook Historical Value Reference. For aircraft not listed (i.e. kits, assembled from parts, experimental), we determine the average retail price based on the average price of similar aircraft being offered for sale.
The average retail price used for calculating the tax is the purchase amount from the year it was first required to be registered.
Please note, a bill of sale with a nominal value such as “$1 and other valuable consideration” will not be considered adequate documentation of the purchase price.
One check is written for the aircraft registration fee and a separate check is written for the aircraft tax due. Both checks are made payable to the Treasurer of Virginia.
These options are not available at this time.
Provide a document showing payment of the aircraft sales and use tax to Virginia. A copy of any one of the following is sufficient:
- Virginia Aircraft Sales and Use Tax Return (AST-3) copy
- Tax payment check copy
- Copy of the Certificate of Payment of Tax issued by the Virginia Department of Taxation
If a similar tax was paid to another state, please provide documentation showing such payment and consideration for a credit towards the 2% Aircraft Sales and Use Tax will be given
Provide document showing the purchase price paid and/or supporting documentation on method used to determine the fair market value. Examples of this may include:
- Bill of Sale copy that includes the purchase price
- Purchase Invoice copy
- Sales Agreement copy
- Bluebook value copy
- Appraisal copy
Code of Virginia §58.1-1505 allows an exemption from paying the 2% Aircraft Sales and Use Tax on any aircraft sold or used by:
- United States or federal agency
- Commonwealth of Virginia or state agency
- Any air carrier operating in intrastate, interstate or foreign commerce providing “scheduled air service” as defined in §58.1-1501
- Any nonprofit charitable organization which is exempt from taxation under §501(c)(3) of the Internal Revenue Code AND which is organized and operating exclusively for the purpose of providing charitable, long distance, advanced life support, air transportation services using an emergency medical services vehicle for low-income medical patients in the Commonwealth
- An organization that is exempt from taxation under §501(c)(3) of the Internal Revenue Code which is organized for the primary purpose of distributing food, clothing, medicines and other necessities of life to, and providing shelter for, needy persons in the United States and throughout the world
- Aircraft that are considered Warbirds, manufactured and intended for military use, excluding those manufactured after 1954, AND (ii) used only for (a) exhibit or display to the general public and otherwise used for educational purposes (including such flights as are necessary for testing, maintaining, or preparing such aircraft for safe operation), or (b) air show and flight demonstrations (including such flights necessary for testing, maintaining, or preparing such aircraft for safe operation), but not including any aircraft used for commercial purposes, including transportation and other services for a fee
- Any aircraft that is purchased in Virginia but registered outside of the Commonwealth and removed from the Commonwealth within 60 days of purchase
Aircraft Registration Applications are to be mailed to:
Virginia Department of Aviation
5702 Gulfstream Road
Richmond, VA 23250-2422
The Aircraft Sales & Use Tax Return is mailed to:
Virginia Aircraft Sales and Use Tax Return
P.O. Box 715
Richmond, VA 23218-0715
Because the 2% Aircraft Sales and Use Tax is on the purchase of property, not on the possession of property, the 2% Aircraft Sales and Use Tax is due on the sales price when you purchased the aircraft that was required to be registered with the Department of Aviation, regardless of whether you still own it.
When any person fails to file a return or pay the full amount of tax required by the Code of Virginia within the 30 days required for filing and payment, a penalty in the amount of 6% is added to the 2% Aircraft Sales and Use Tax. An additional 6% of the tax is charged for each additional 30-day period. The additional penalty will not exceed 30%.
Interest is determined at a rate in accordance with the Code of Virginia §58.1-15 and applies to the unpaid amount of the tax from the day after the due date for timely filing. Interest on the payment of the tax will accrue until the tax is paid.
Virginia’s law is the 2% Aircraft Sales and Use Tax does not apply when the ownership of an aircraft is transferred from an individual or partnership when such transfer is incidental to the formation, organization or dissolution of a corporation in which the individual or partnership has the majority interest.
Any aircraft owned by a resident of this Commonwealth is required to immediately register your aircraft in Virginia.
If you are a non-resident and your aircraft was brought into Virginia prior to July 1, 2020 for a period of greater than 60 non-consecutive days during any 12 month period, you are required to register your aircraft in Virginia and pay the one-time 2% Aircraft Sales and Use Tax.
If you are a non-resident and your aircraft was brought into Virginia after July 1, 2020 for a period of greater than 90 non-consecutive days during a calendar year, you are required to register your aircraft in Virginia and pay the one-time 2% Aircraft Sales and Use Tax.
A Virginia aircraft registration cannot be issued unless the aircraft is properly insured and the 2% Aircraft Sales and Use Tax has been paid to the Commonwealth of Virginia. The Code of Virginia §58.1 states that a tax is levied on the retail sale of every aircraft sold in the Commonwealth and upon the use in the Commonwealth of any aircraft required to be registered by the Department of Aviation.