Digital entertainment

Retail sales tax applies to digital entertainment subscription fees. These subscriptions allow a user to download digital products such as movie streaming, videos, television programming, music, e-books, mobile apps, games, etc. It does not matter if the user pays for permanent or limited (i.e., 24-hour period) use rights.

These digital entertainment providers must collect and submit retail sales tax, and pay business and occupation (B&O) tax under the retailing classification if they both:

Have a physical presence in Washington.
Have subscribers located in this state.

Example

Company A is located outside of Washington but has a physical presence in Washington. Company A offers an online subscription for digital entertainment. This includes streamed access to hundreds of thousands of hours of:

Current season TV programming.
Premium original content.
Films.
Full seasons of hit series.
A limited commercials option.

Company A’s subscription sales represent the sale of digital goods (i.e., digital audiovisual works). Company A must collect and submit retail sales and pay retailing B&O taxes on their subscription income received from Washington customers.

Definitions

Digital goods are sounds, images, data, facts, or information, or any combination transferred electronically. This includes digital audiovisual works.

Digital audiovisual works are a series of related images which, when shown in succession, impart an impression of motion, together with accompanying sounds, if any.