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 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

Examples of items and services included in sales price:

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).

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.

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.

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.

The following purchases are not subject to sales or use tax.

Note: These exemptions do not apply to purchases used to create nontaxable advertising services.

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

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.

For more information, see Capital Equipment.

• 297A.61, Definitions
  • subd. 7, Sales price
• 297A.68, Business Exemptions
  • subd. 2, Materials consumed in industrial production
  • subd. 10, Publications, publication materials
  • subd. 11, Advertising materials
  • subd. 30, Television commercials

• 8130.0700, Producing, fabricating, printing, or processing of property furnished by the customer
• 8130.8800, Commercial artist and photographers
• 8130.9250, Advertising

• 06-11, Sales Price Labor Charges

• Advertising
• Capital Equipment
• Industrial Production
• Isolated and Occasional Sales
• TV Commercials
• Use Tax for Businesses

• Photography
• Local Sales and Use Taxes