Industry Topics for Venue Rental Businesses

The Basics

Sales and Use Taxes in General

In California, all sales of tangible personal property are taxable unless the law provides a specific exemption or exclusion. The law defines tangible personal property as an item that can be seen, weighed, measured, felt or touched.

As a venue rental business, services you perform in connection with the sales of tangible personal property may be subject to sales tax.

Use tax is a companion to California's sales tax, and is due whenever you purchase taxable items without payment of California sales tax from an out-of-state vendor for use in California. You also owe use tax on items that you remove from your inventory for use in California when you did not pay tax at the time of purchase. For example, if you issued a resale certificate to purchase carbonated beverages but took any of them out of inventory for personal consumption or gave any away, you owe use tax based on the purchase price of the soda you removed from your inventory.

To pay use tax, report the purchase price of the taxable items under "Purchases Subject to Use Tax" on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.

Seller's Permit

Most people who sell taxable items or perform taxable labor in California, even temporarily, must register with the CDTFA for a seller's permit.

Registering for a seller's permit is free, although in some cases a security deposit may be required.

If your business has more than one location that participates in taxable transactions, you must register each location with us.

You can register with us for a seller's permit or consolidated seller's permit (that is, a permit that includes sub-permits issued for each location) using our Taxpayer Online Service Portal.

Be sure to let us know about any changes to your business, or to your mailing or email address so we can keep your records updated and inform you of important changes in law, tax rates, or procedure. You can easily update your account information by creating an online account in our online services with a username and password, contacting our Customer Service Center or any one of our field offices throughout the state. Contact information is available in the Resources section of this guide.

Know-Your-Tax-Rates

The current statewide base sales and use tax rate is 7.25 percent. However, the total sales and use tax rates are higher in areas where district taxes are imposed.

District taxes are voter-approved taxes imposed by cities, counties, and other local jurisdictions. District taxes are added to the statewide base rate. If you are a retailer, you are responsible for reporting your retail sales and paying the tax to us at the proper rate. If you make retail sales in California from a business located in a taxing district, you are generally responsible for the district sales tax. You are also responsible for collecting, reporting, and paying the district use tax when making sales for delivery into taxing districts in which you are considered "engaged in business in the district."

Generally, you are "engaged in business in a district" when you meet one of the following conditions:

Notes

  1. On and after April 25, 2019, a retailer is considered engaged in business in every district that imposes a district tax if, in the preceding or current calendar year, their total combined sales of tangible personal property in this state or for delivery in this state exceed $500,000. As such, all retailers meeting this threshold are responsible for collecting and paying any district tax on taxable sales made for delivery in any district that imposes a district tax.

For more information on being engaged in business in a district, please see publication 44, District Taxes (Sales and Use Taxes) or our Local and District Tax Guide for Retailers. Current and historical district tax rates may be found on our California City & County Sales & Use Tax Rates webpage.

You can look up tax rates by city and county or find the full tax rate in your city or county by going to the Find a Sales and Use Tax Rate webpage and entering the address as prompted.

Key Industry Topics

The information provided below includes common industry topics for venue rental businesses. If you are a business that rents venue space, your charge for the venue rental, related sales of tangible personal property, rentals of tangible personal property, and services, may be taxable.

Venue Rentals Only

A rental of premises for an event, without any sale or lease of tangible personal property, is a rental of real property and tax does not apply to your rental fee.

Venues Rented with Tangible Personal Property

Sales and use tax is imposed on the sale or lease of tangible personal property. Items sold or leased with a venue rental are generally taxable.

Retail sales of tangible personal property, for example, flowers or vases, are subject to tax measured by gross receipts, unless specifically exempt.

As a venue rental business, you may also lease tangible personal property. A lease includes any rental, hire, license. Commonly leased items by venue rental businesses include chairs, linens, tables, etc. Your lease of such items with a venue rental may be taxable. How tax applies depends on whether or not you paid tax at time you purchased the item or placed the items into your rental inventory. No tax is due on your lease receipts if the items are leased in substantially the same form as you acquired them, and you paid tax, either to your vendor or by timely reporting and paying use tax measured by the purchase price of the property.

Example 1:

You operate a venue rental business. You will supply the chairs, tables, and linens for your customer's use at the event. Upon purchase of these items, you paid tax on the purchase price directly to your vendor. Therefore, your charge for the rental of these items is not subject to tax.

Example 2:

Assume the same facts given in Example 1. Your customer requests special lighting effects for their event. You did not pay tax on the purchase price of the lighting equipment directly to your vendor and did not timely elect to report and pay use tax measured by your purchase price. The charge for the rental of the lighting equipment is taxable lease receipt. You must collect, report, and pay tax based on your charge for the lighting equipment rental.

For more information on when tax applies to leases of tangible personal property, see publication 46, Leasing of Tangible Personal Property.

Venue Rentals and You Provide Food and Beverages

With a rental of premises for an event in which the primary purpose is serving food and beverages, furnished by you, the rental fee is subject to tax, even if you separately state the food and beverage charges.

This is true whether real property is regularly used for serving meals and beverages (such as restaurants, hotels, and similar establishments) or not (such as wineries, museums, country clubs)

Example:

You operate a golf course with an outdoor courtyard which is not regularly used as a space where food and drinks are served. You contract with a customer who rents the courtyard for a wedding reception and you provide a third-party caterer to furnish the food and beverages. Since the primary purpose of the event is to serve food and beverages, you are considered to be functioning as a restaurant. The entire charge is taxable, regardless of whether it is a lump sum price or the caterer's charge is separately stated.

However, if you contract to provide and serve food/beverages at your venue, but also rent a separate area to your customer for a use other than serving food/beverages, the charge for the use of the separate area unrelated to serving of food/beverages is not subject to tax if the charge is separately stated on the invoice. In the example above, a separately stated charge for a different area of the golf course where the bride and groom prepare for the reception would not be subject to tax.

For more information, see publication 22, Dining and Beverage Industry.

You Provide a Venue and Your Customer Hires a Third-Party for Food and Beverages

When you provide a venue rental and your customer separately hires a third-party catering company to provide food and beverages, you do not owe tax on your venue rental charge because you are not the retailer of food and beverages. Generally, your venue rental is a nontaxable rental of real property.

Example:

A customer wants to rent your warehouse for a birthday event. Your customer will contract with a food vendor to cater food and beverages. Since your contract with your customer only involves the rental of the warehouse and does not involve the furnishing of food and beverages, you are not the retailer of food and beverages. The food vender will be responsible for the tax for the catering of food and beverages.

However, any charges you make to your customers for preparing or serving food or beverages that they provide are taxable. For example, tax applies to any charges you make for cutting and serving a wedding cake or opening and serving customer-furnished wine.

For more information, see publication 22, Dining and Beverage Industry.

Services Provided with Your Venue-Rental

In addition to your venue rental, you may also provide services. How tax applies to your service charges depends on whether the services are related to the sale of tangible personal property.

Services related to the sale of tangible personal property, such as food, flowers, bar service fees, and mandatory coordinator fees, are generally taxable.

Example 1:

You rent a venue to your customer which includes an all-inclusive package for the venue that includes food and beverages, flower arrangements, bar service fees, and mandatory coordinating fees. The sale of tangible personal property including catered food and beverages and flower arrangements and bar services fees, and mandatory coordinator fees related to the sale of tangible personal property to your customer are taxable.

However, services not related to the sale of tangible personal property, such as DJ services and security services, are generally not taxable when a separate statement between taxable and nontaxable charges are made on a sales receipt, invoice, or contract, and your books and records support the nontaxable charges.

Example 2:

Assume the same facts given in Example 1. However, your customer requests that you also provide DJ services and security services. Since the charges for these services do not relate to the sale of tangible personal property, and are separately stated on the sales invoice, these charges are not subject to tax.

For more information, see publication 22, Dining and Beverage Industry.