Peer-to-peer vehicle rental bill proceeds to the Governor’s desk

February 27, 2020

After nearly two months of debates, amendments and hearings, legislation creating a comprehensive framework for peer-to-peer vehicle rentals in the Commonwealth has now passed both the House of Delegates and the Senate and will head to the Governor’s desk.

SB 735 (Newman) is an all-inclusive, compromise bill developed and agreed to by all parties involved in and affected by peer-to-peer vehicle rentals, including local governments, the peer-to-peer industry, car rental companies, insurance representatives, and more.  Originally, VACo had partnered with Enterprise, Hertz, the American Car Rental Association, as well as several other regional and local governmental associations to introduce SB 749 (Cosgrove)HB 891 (Sickles) and HB 892 (Sickles), while the peer-to-peer rental industry introduced their own legislation, SB 735 (Newman) and HB 1539 (Jones).  One of the main differences (and ultimately the main sticking point) between these two bills was the tax structure that was proposed, an issue that led to the defeat of HB 891 and HB 892 in the House Finance Committee (HB 1539 was rereferred to the House Appropriations Committee but not taken up).  After several weeks of negotiations and new hearings, ultimately a new compromise bill was drafted by all parties and introduced as a substitute for SB 735.

Under this new legislation, owners of more than 10 vehicles that use one of these peer-to-peer vehicle rental platforms will be taxed at the same rate as ordinary rental companies.  Under the motor vehicle rental tax (MVRT) rate, rentals are taxed at a 10 percent composite rate (4 percent for localities).  For owners of 10 or fewer vehicles, however, a tax of 6.5 percent of gross proceeds shall be paid from July 1, 2020, until July 1, 2021.  After July 1, 2021, this rate climbs to 7 percent of gross proceeds.  This equates to a rate of 2.5 percent to be paid to localities in the first year, and 3 percent each year after.

SB 735 reported from the Senate Finance and Appropriations Committee, 14-1-1, and ultimately passed the full Senate by a vote of 40-0.  Last week, SB 735 was heard and unanimously reported out of both the House Finance Committee and the House Appropriations Committee.  Late Wednesday evening, the bill was heard a final time on the House floor and passed by a vote of 95-4.  SB 735 will now be sent to the Governor for consideration and eventual signing.

VACo is grateful to have been a part of this coalition and has been pleased to support and speak on behalf of this legislation as it made its way through the General Assembly.

VACo Contact: Chris McDonald, Esq.

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