The Commonwealth of Virginia offers a variety of performance-based incentives, including cash grants, tax credits and tax exemptions designed to encourage growth and expansion.
Grants & Benefits
Governor’s Opportunity Fund (GOF)
The Governor’s Opportunity Fund (GOF) is a discretionary incentive available to the Governor to secure a business location or expansion project for Virginia. Grants are awarded to localities on a local matching basis with the expectation that the grant will result in a favorable location decision for the Commonwealth.
Tobacco Regional Opportunity Fund (TROF) Grant
The Tobacco Regional Opportunity Fund (TROF) grant provides discretionary incentives based on the number of new jobs being created, the average wage, and the mount of new capital investment.
Several of the communities within the Southern Virginia region are situated within the Tobacco Indemnification and Revitalization footprint. Qualifying companies must invest a minimum of $1 million and create at least 10 jobs over 36 months to be eligible.
Commonwealth Research Commercialization Fund (CRCF) Grant
The Commonwealth Research Commercialization Fund (CRCF) awards grants and loans to advance targeted research and commercialization in Virginia. For Fiscal Years 2013 and 2014, $9.6 million of new funding has been added in the following three main subprograms:
- Research Matching: Awards to collaborative research partners seeking outside grants but unable to identify a suitable match.
- Facilities Enhancement: Awards to qualifying public or private higher education institutions and political subdivisions in Virginia to help finance facilities used for qualified research or technology commercialization.
- Commercialization: Awards to encourage the commercialization of products and services in Virginia.
Virginia Enterprise Zone (EZ) Program
There are 23 Enterprise Zones within the Southern Virginia region, providing several state and local benefits to companies locating in these designated areas.
State Enterprise Zone Benefits
Businesses looking for financial assistance can be considered for State Enterprise Zone benefits, which include Job Creation Grants (JCG) and Real Property Investment Grants (RPIG). These incentives are made available to qualified companies meeting the Commonwealth’s pre-defined job creation, wage rate, and capital investment requirements.
Local Enterprise Zone Benefits
In addition to benefits offered through the State Enterprise Zone Program, local communities also encourage growth and expansion by offering their own added benefits to businesses located in an Enterprise Zone.
These benefits vary in each community, but generally include:
- Development fee waivers
- Tax relief on real estate, business and personal property, machinery and equipment •Exemption from Business, Professional, and Occupational License (BPOL) taxes
- Water/sewer connection fee credits
Tax Credits & Exemptions
Refundable Research and Development Expenses Tax Credit
Businesses may claim a tax credit equal to 15% of the first $167,000 ($25,050) in qualified research and development expenses incurred during the taxable year.
Or, they may claim a tax credit equal to 20% of the first $175,000 ($35,000) in qualified research and development expenses if the qualified research was conducted in conjunction with a Virginia college or university.
Major Business Facility Job Tax Credit
Qualified companies locating or expanding in Virginia receive a $1,000 income tax credit for each new full-time position created over a pre-defined threshold number of jobs. Companies locating in Enterprise Zones or economically distressed areas (including several communities in Southern Virginia) are required to meet a 25-job threshold; a 50-job threshold is required in all other locations. The $1,000 credit is available for all qualifying jobs in excess of the threshold and these jobs must be created within a 12-month period; however, the credit is currently paid out in equal installments over a two-year period and will be distributed in three installments beginning in 2014. For additional information on the Major Business Facility Job Tax Credit, including a list of program exemptions, please contact the Virginia Economic Development Partnership.
Recycling Equipment Tax Credit
Virginia also offers an income tax credit to manufacturers for the purchase of certified machinery and equipment used for processing recyclable materials in taxable years before January 1, 2015. The credit is equal to 10 percent of the total original capitalized cost of the equipment. In any taxable year, the amount of the credit allowed cannot exceed 40 percent of the company’s Virginia income tax liability before the credit. The unused amount of the credit may be carried over for 10 years, pending certification by the Virginia Department of Environmental Quality that the eligible equipment is integral to the recycling process.
Sales and Use Tax Exemptions
Virginia offers some of the most generous sales and use tax exemptions in the U.S. These include:
- Manufacturers’ purchases used directly in production including machinery, tools, spare parts, industrial fuels and raw materials
- Items purchased for resale by distributors
- Certified pollution control equipment and facilities
- Custom computer software
- Utilities delivered through lines, pipes or mains
- Purchases used directly and exclusively in research and development
- Charges for Internet access, related communications services and sales of software via the Internet
- Computer equipment purchased or leased for the processing, storage, retrieval, or communication of data in large data centers. A minimum capital investment, job creation and wage level requirement must be met to receive this exemption.
Virginia does not tax:
- Intangible property
- Manufacturers’ inventory, furniture and fixtures
- Corporate aircraft
- Certified pollution control facilities and equipment
Localities also have the option to fully or partially exempt the following property from taxation:
- Certified recycling equipment
- Rehabilitated commercial/industrial real estate for up to 15 years
- Manufacturers’ generating and co-generating equipment
- Certified solar energy devices
- Environmental restoration sites
- Eligible real estate in the Virginia Voluntary Remediation Program
Localities may elect to tax the following tangible personal and real property at reduced rates:
- Research and development-related tangible personal property
- Equipment used for biotechnology research, development and production
- Semiconductor manufacturing machinery and tools
- Computer hardware and peripherals
- Clean-fuel vehicles
- Tangible personal property used in the provision of certain Internet services
- Energy-efficient buildings*
*Please check directly with the localities to determine which real or personal property tax exemptions or reductions may be available in a given city, county, or town.
Inquiries about doing business in Southern Virginia contact email@example.com.