Alcoholic beverages are subject to Vermont taxes. Before you begin selling alcoholic beverages, you must have your Vermont business tax account and licensing. Be sure to post your license authorizing you to collect Vermont taxes in a place where customers can see it, such as near a cash register. The Department of Taxes does not issue licenses to sell alcohol. For licensing information, visit the Vermont Department of Liquor Control.
Taxability of Alcoholic Beverages Provided for Takeout or Delivery
Businesses may sell and deliver alcoholic beverages, as long as the beverages are purchased when they are served a meal. When alcoholic beverages are sold with a meal for immediate consumption, the alcoholic beverages are subject to the 10% tax.
Alcoholic beverages sold by a restaurant for takeout are subject to the 10% tax on alcohol required by the Vermont Meals Tax. The term “restaurant” includes cafes, cafeterias, dining rooms, diners, lunch counters, salad bars, private or social clubs, bars or taverns, theater concessions, street vendors, street carts, food trucks, and catering businesses. For more details on what qualifies as a restaurant, see restaurants.
Note that a charge for delivery is considered part of the price for a meal or alcoholic beverage. This means meals tax applies to all delivery charges. All charges are also subject to the highest applicable tax rate unless separately stated on the receipt or invoice and separately reported to the Department. Accordingly, a restaurant should apply the 10% alcohol rate to delivery charges if it does not itemize the receipt to show separate charges for delivery of meals and delivery of alcoholic beverages.
Grocery and Convenience Stores
Licensed retail stores that do not qualify as restaurants collect 6% sales tax when selling alcoholic beverages for delivery. The sales tax must be applied to the full charge, including any charge for delivery.
Please contact the Department at (802) 828-2551 or send an email if you have any questions.
Sales and Use Tax
Sales of alcoholic beverages by retailers, such as grocery stores or convenience stores, that
are suitable for human consumption and
contain one-half of 1% or more of alcohol by volume are subject to the 6% Vermont Sales and Use Tax. See definition at 32 V.S.A. § 9701(23).
A sale of an alcoholic beverage could be subject to the 6% sales and use tax, or the 10% alcoholic beverages tax, but never both. Tax treatment depends on whether a sale is for immediate consumption. Sales and use tax applies to alcoholic beverages sold at retail that are not for immediate consumption. This includes alcoholic beverages sold at retail in a sealed container for off-premises consumption. The 10% alcoholic beverages tax applies to all other sales of alcoholic beverages for immediate consumption, as long as the sales are not otherwise exempt.
Alcoholic Beverage Tax
Sales of alcoholic beverages that
are any malt beverages, vinous beverages, or spirituous liquors and
Tax Included in Pricing
Businesses are required to give notice to their customers when the Vermont Meals and Rooms Tax or Alcoholic Beverage Tax is included in the pricing of food, room rentals, or served alcoholic beverages.
You must do one of the following:
Provide a sign or signs with the type of tax charged in an area where customers may view them, such as near the cash register.
Make a statement on the menu, price list, bill, invoice, statement, or receipt given to the customer.
In addition, you must provide an itemized bill to any purchaser upon request.
Below is an example of how a notice might read:
All prices include the Vermont Alcoholic Beverage Tax
All businesses that include the 9% meals tax and the 10% alcohol tax in their prices must give notice. This includes, but is not limited to, the following:
Restaurants and bars
Mobile facilities such as street vendors and lunch wagons
Other businesses and facilities described in 32 V.S.A. § 9202(15)
Local Option Tax
If you are doing business in or delivering products to a municipality with a 1% local option alcoholic beverages tax or local option sales tax, you must also collect and remit that tax to the Vermont Department of Taxes. Please note: Meals and rooms tax is not subject to use tax.
Other Local Taxes
The City of Burlington, City of Rutland, and City of St. Albans administer and collect their own local meals, entertainment, lodging, or alcoholic beverage taxes. If you have a business in Burlington, Rutland City, or St. Albans City, please contact the appropriate city for information on how to collect and remit the tax.
Contact the City of Burlington: (802) 865-7000
Contact the City of Rutland: (802) 773-1800
Contact the City of St. Albans: (802) 524-1500