Even though Software-as-a-Service (SaaS) is generally non-taxable in Virginia, you might still have important filing obligations. This article explains why and what you need to do to stay compliant.
Is SaaS Taxable in Virginia?
No. Virginia does not tax SaaS. This is because SaaS is considered a service, not a sale of tangible personal property. So, if you sell SaaS to customers in Virginia, you typically don’t collect or remit sales tax on those transactions.
Why Does My Account Show Nexus Exposure in Virginia with $0 tax Liability?
This happens if your business meets Virginia’s economic nexus thresholds:
More than $100,000 in gross revenue from retail sales in Virginia during the current or previous calendar year, or
200 or more separate retail sales transactions in Virginia
If you meet either of these thresholds, you are required to:
Register for a Virginia sales tax permit.
File regular sales tax returns, even if all your sales are for non-taxable services like SaaS. This is called zero-dollar filings. It is when there is no tax due because the sales are non-taxable, businesses must file $0.00 tax liability returns to remain compliant.
In this scenario, seeing nexus exposure with a $0.00 tax liability in your Kintsugi account is normal and is solely for compliance purposes.
What Does This Mean For Your Business?
Once you meet Virginia’s nexus threshold:
You must register for a Virginia sales tax permit, and
You must file regular returns, even if no tax is due (zero-dollar filings).
Failing to file after registration can result in penalties, even if your taxable sales are zero.
Key Takeaways
SaaS is non-taxable in Virginia.
Economic nexus thresholds still apply to your total Virginia sales volume.
If you meet those thresholds, you’re required to register and file—even if all your sales are for non-taxable SaaS.
Kintsugi will show nexus exposure and $0 liability in this case, which is normal and compliant.
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