I'm an artist who painted a custom mural on canvas panels that were installed into a train station -- is my entire charge for the artwork and installation subject to Virginia sales tax?

Plain-English summary

An artist who specializes in framed works and murals was commissioned to create a mural for a refurbished train station. The mural was painted on three separate canvasses, which were then physically installed into the subframe of the station once complete. The artist asked the Department whether Virginia sales tax applied to this kind of custom, installed artwork.

Virginia uses a "true object" test whenever a transaction blends a service (here, the artist's creative work) with tangible personal property (the physical canvasses). If the tangible property being transferred isn't really critical to what the customer wants -- for example, pure advice or a personal service where any resulting paperwork is incidental -- the transaction can be treated as an exempt service. But if the customer's actual goal is to end up owning the physical property itself, the entire charge is taxable, including any labor or service work bundled into the price.

Here, the mural had no value to the train station without the canvasses themselves being installed -- the whole point of the commission was the finished, physical artwork built into the building. Because the property (the canvasses) was clearly critical to the transaction rather than incidental to some separate service, the Department ruled the entire charge -- covering both the artist's creative labor and the physical materials -- was subject to Virginia retail sales and use tax.

What this means for you

Artists, muralists, and other creators who sell commissioned, physical artwork

If your customer's goal is to end up owning a physical piece -- a painting, a sculpture, an installed mural -- expect your entire charge, including your creative labor, to be taxable in Virginia. The "true object" test looks at what the customer is ultimately buying, not how you itemize your invoice between materials and creative work.

Businesses or property owners commissioning custom artwork for installation

Build Virginia sales tax into your budget for the full commission price when hiring an artist to create and install a permanent physical piece -- there's no exemption simply because a significant portion of the value reflects creative or intellectual labor rather than raw materials.

Anyone providing a genuine service where any physical output is incidental

This ruling is a useful contrast case: it shows what happens when the physical property IS the point of the transaction. If your situation instead involves physical materials that are merely incidental to a service you're providing (the reverse fact pattern), the true object test could point the other way -- but that requires the property to be genuinely secondary, not just packaged alongside a creative process the way it was here.

Common questions

Q: What is Virginia's "true object" test?
A: It's the test the Department uses when a transaction combines a service and the transfer of tangible personal property. If the customer's real goal is to obtain the property, the whole charge (including any service/labor component) is taxable; if the property is merely incidental to a genuine service, the transaction can be treated as an exempt service instead.

Q: Does it matter that most of the mural's value came from the artist's creative skill rather than the cost of the canvas and paint?
A: Not under this ruling's reasoning. The test asks what the customer was actually trying to buy (the finished, installed artwork), not how the price breaks down between materials and labor -- since the physical canvasses were critical to the transaction, the entire charge was taxable.

Q: Would the answer be different if the artwork had been sold as a digital file or a license rather than a physical, installed piece?
A: This ruling doesn't address that scenario, but the true object test's core question -- whether tangible property being transferred is critical to what the customer is buying -- suggests a transaction without any physical property transfer could be analyzed differently. Confirm with the Department or a tax professional for facts that differ from this ruling's.

Citations and references

• 23 VAC 10-210-4040 D (true object test: property critical to the transaction makes the entire charge taxable)

Subject

True Object Test, Art on Canvas

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 21-157

Original ruling text

December 28, 2021

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”) requesting a ruling on the application of the retail sales and use tax to mural work installed in a refurbished train station. I apologize for the delay in responding to your correspondence.

FACTS

The Taxpayer is an artist specializing in framed works and murals and seeks a ruling on the taxability of a mural painted for a train station. The mural in question was painted on three separate canvasses and installed into the subframe of the train station upon completion.

RULING

When determining whether a transaction involving both the sale of tangible personal property and the provision of a service represents a sale of tangible personal property or an exempt service, the "true object" test is used. Title 23 of the Virginia Administrative Code 10-210-4040 D states that "[i]f the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service. However, if the object of the transaction is to secure the property which it produces, then the entire charge, including the charge for any services provided, is taxable."

In the present case, the "true object" of the transactions between the Taxpayer and its customer (the train station) must be determined. Based on the information provided, the mural work would be of no value to the customer without the transfer of the canvasses that will be installed in the subframe. Therefore, based on the above regulation, the entire charge for the mural work, including the services rendered in creating the work, would be subject to the Virginia retail sales and use tax.

I hope the foregoing will respond to your inquiry. This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The regulation cited is available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department’s web site. If you have any questions about this response, you may contact * in the Department’s Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/2140L