Video Production
This guide will help you determine which video products and services are taxable.
There are many different kinds of video products and services, such as the following:
- Commercial videos
- Trade show videos
- Training videos
- Motion pictures
- Movies
- Musical videos
- Website videos
- News and entertainment
- Live events
Taxable Sales
This section provides information on taxable sales of videos and video production.
Videos
Sales and rentals of videos are taxable regardless of how they are delivered to the customer. This includes:
- Videos sold in a tangible (physical) format, such as on tape, CD or DVD, or flash drive.
- Video transferred electronically, which became a “taxable digital product” on July 1, 2013. Common examples include:
- Accessing video on a website
- Streaming video
- Uploading and downloading Internet videos
- Sending video by email
Note: Selling access to view or use videos is taxable – whether temporary or permanent – even if the purchaser does not make or retain a copy.
For more information, see Digital Products.
Video Production
Video production services are taxable when they result in the sale of a tangible (physical) product or taxable digital product. All charges to create, modify, or alter these products are taxable, even if the customer provides some of the materials or equipment. For details, see Revenue Notice #06-11, Sales Price Labor Charges.
Examples of video production services include:
- Filming
- Editing
- Voice-overs
- Animating
Charging Sales Tax
The sales price includes all charges necessary to create the taxable product. The entire amount billed to the customer is taxable, even if services are separately stated.
Examples of items and services included in sales price:
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- lodging (including taxes paid)
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- meals (including taxes paid)
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- copyright or licensing fee
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- stylists and makeup artists
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- travel time and expenses (including taxes paid)
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- wages or salaries paid to assistants
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Local Sales Tax
Some cities and counties have local sales and use taxes. If you are located in or make sales into an area with a local tax, you may owe local sales and use tax. For more information, see Local Sales and Use Taxes.
To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use our Sales Tax Rate Map or Sales Tax Rate Calculator to help you determine the sales tax rate.
Note: The map and rate calculator do not include special local taxes.
For more information, see:
Example
Your studio and office is in Minneapolis. You film a wedding and reception in Duluth. You provide a proof to the couple on a flash drive at your studio, but deliver the finished video – or give electronic access – to the couple at their home in St Paul. You also send a video DVD to the bride’s mother in Wisconsin.
- The flash drive you provided at your studio is taxed at the rate in effect for Minneapolis.
- The finished video delivered to the couple’s home is taxed at the rate in effect for St. Paul.
- If separately stated, no Minnesota tax applies to the mother’s DVD delivered out-of-state (Wisconsin).
Nontaxable Sales
You do not need to charge Minnesota sales taxes when you:
- Deliver products or services to customers outside of Minnesota
- Provide nontaxable advertising services
Delivered Outside of Minnesota
Products or services delivered to a customer outside of Minnesota are not subject to Minnesota tax. No exemption certificate is required. You must maintain records that show the items were shipped to a customer outside of Minnesota.
The customer may owe use tax in the state where the product was delivered.
Nontaxable Advertising
Video production services are not taxable when you provide them as part of a sale of a nontaxable advertising services. To qualify as a provider of nontaxable advertising, you must meet three requirements:
- The final product has no use beyond advertising (such as for employee training)
- You create the advertising (rather than sending the raw video to an ad agency)
- You work directly with the advertiser (rather than as a subcontractor)
If you meet the above requirements, do not charge sales tax. Your invoice must clearly state that you provided “creative promotional services.” No exemption certificate is required.
Note: You must pay sales or use tax on all taxable inputs used to create the advertising. For more information, see
Taxable Purchases and Use Tax.
Sales Tax Exemptions
Video sales to certain types of customers and for certain uses are not taxable. You must charge sales tax unless the customer gives you a completed Form ST3, Certificate of Exemption.
Note: Sales to advertising agencies are taxable unless an exemption applies.
Taxable Purchases and Use Tax
Items you use to operate your business are taxable, unless an exemption applies. Several services are also taxable.
If you do not pay sales tax on a taxable purchase, then use tax is due.
Taxable Purchase
| Taxable Purchases |
Examples |
| General items |
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| Taxable services |
For more information, see Taxable Services. |
| Travel expenses |
As a video service provider, your travel expenses are taxable, even if you bill them to the customer. (You may not purchase travel services exempt for resale.) Examples include:
- Lodging
- Meals and beverages
- Transportation (airfare, vehicle rental, or motor vehicle fuel)
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| Inputs used to produce nontaxable advertising |
When you create and produce nontaxable advertising, you are generally acting as an advertising agent and must pay sales tax on all materials used to create the advertising. Taxable inputs include charges to create, modify, or alter a video.
For more information, see Advertising. |
Use Tax
If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.
Some common situations where you may owe use tax include:
- You buy taxable items or services online without paying sales tax
- You withdraw an item from inventory to use (instead of selling it), donate, or give away
- You buy taxable items outside of Minnesota
- You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax
Nontaxable Purchases
You may buy certain items for your business without paying sales tax by giving your vendor a completed Form ST3, Certificate of Exemption. These exemptions depend on the type of item purchased and how it’s used in your business.
The following purchases are not subject to sales or use tax.
| Nontaxable Purchases |
Description |
| Air time |
Placement of a commercial at a theater or on the radio, TV, or a website is not taxable. In this case, no certificate of exemption is required. |
| Resale |
Items that you will resell to your customers – as is or as part of the finished product – are exempt from sales tax. Examples include stock video footage or voice-overs. |
| TV commercials |
Materials and labor you buy and use to produce a TV commercial are exempt from sales tax. For details, see TV Commercials. |
| Materials and supplies |
Materials and supplies are exempt from sales tax if they are used in an industrial production process – that is, consumed or destroyed in the process of creating a tangible product. |
| Capital equipment |
Certain equipment used to create a tangible product for retail sale is exempt from sales tax. For more information, see Capital Equipment. |
Note: These exemptions do not apply to purchases used to create nontaxable advertising services.
Capital Equipment
Purchases of capital equipment are exempt from sales tax if the equipment is used in both of the following ways:
- To create a tangible product for retail sale
- In Minnesota for at least half of its operating time
Examples of capital equipment used in video production that may qualify include
| cameras |
lighting equipment |
| props |
printing equipment |
| backdrops |
recording equipment |
| editing equipment |
production computers and software |
| processing equipment |
accessories and attachments for production equipment |
Note: Equipment is taxable if it’s used in one of the following ways.
- to produce photography that is electronically delivered to a customer
- to provide nontaxable advertising services.
Filing Returns and Record-Keeping
When filing your return, you must report all sales tax collected and use tax you owe.
Filing Returns
If you are not registered for sales and use tax, you must contact the Minnesota Department of Revenue and register to collect and report taxes. Call Business Registration at 651-282-5225 or 1-800-657-3605 (toll-free).
For more information, see Sales Tax Return Due Dates.
How to Report Sales and Use Tax
You must file a Sales and Use Tax return online through our e-Services system. For more information, see Filing Information.
Record-Keeping
It is important to keep good records to determine the correct amount of state and local tax you owe.
Your records should include:
- Bills, receipts, invoices, cash-register tapes, and any other documents that support the entries in your books
- Exemption certificates
- Shipping documents
- Worksheets used to prepare your tax returns
For more detailed and specific information on Video Production , you can visit at Video Production Industry Guide – Minnesota Department of Revenue
