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. For nonfinancial entities, ensure that non-bank entities comply with any applicable state tax filing requirements for their entity type.
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. If your organization operates financial institutions in Virginia, you'll need to comply with the 1% tax on net capital, due annually on March 1. 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.
Managing franchise tax compliance across multiple jurisdictions can drain your team's time and resources while increasing error risks. While Discern doesn’t handle these complex tax filings, we ease your administrative burden by automating entity compliance. Filings that typically take 3–4 hours can be completed in under 20 minutes, freeing your compliance team to focus on higher-value activities.
.png){kind=small}