Virginia's franchise tax situation is refreshingly simple compared to many other states. The Commonwealth only imposes the Virginia franchise tax on banks and trust companies. No other business entities are subject to this tax.
This clear delineation simplifies compliance planning for organizations managing multiple entity types across different jurisdictions. If your organization includes both financial institutions and other business entities in Virginia, you'll need to prepare bank franchise tax filings for the qualifying banking operations.
Do you owe Virginia franchise tax?
The Virginia franchise tax applies exclusively to banks and trust companies as defined under Va. Code § 58.1-1200. The state's definition includes:
The Virginia Department of Taxation provides comprehensive guidance through their Bank Franchise Tax portal to support affected institutions.
Several exemptions apply, including banks in active liquidation, savings institutions under different regulatory frameworks, out-of-state banks without physical Virginia presence, and federal land banks.
For specialized financial services companies with complex regulatory structures, verification with corporate counsel or the Virginia State Corporation Commission is recommended before assuming exemption status.
Standard business entities, such as LLCs, corporations, partnerships, and nonprofits, face no Virginia franchise tax obligations regardless of size or industry.
The local credit provision offers significant tax relief, potentially reducing your state liability by up to 80%. For a bank with $50 million in net capital, the maximum local credit could reduce state tax from $500,000 to $100,000, assuming sufficient local franchise taxes were paid during the year.
A 5% penalty applies to unpaid bank franchise tax when returns or payments are late, and interest accrues at the federal underpayment rate plus 2% until paid.
There is a statutory maximum total bank franchise tax liability of $18 million per bank.
Virginia's bank franchise tax applies only to financial institutions and requires specialized tax knowledge for Form 64 filing and net capital calculations.
While Discern does not file Virginia bank franchise taxes directly, Discern can file your Virginia annual reports with the State Corporation Commission, provide registered agent services, notify you when tax obligations are due, and help you track compliance across all your entities.
Ready to simplify your multi-state compliance? Book a demo to see how Discern streamlines entity management across all 50 states and DC.
.png){kind=small}