Through public policy advocacy in Richmond, NVTC has long promoted a two-track economic development and job creation agenda to benefit its members and the Northern Virginia technology community.
Enhance the Commonwealth's tools to attract mature companies seeking to expand, relocate, move corporate headquarters, establish research operations and otherwise bring job growth and tax revenue to the Commonwealth.
Employ a comprehensive "grow your own" strategy to encourage entrepreneurs to invent, innovate, launch and accelerate their technology startups in Northern Virginia. NVTC has advocated for initiatives and policies to make Virginia the top state for entrepreneurs and a preferred location for those looking to do applied research, invent, commercialize intellectual property, attract early-stage funding, launch businesses and create jobs organically.
NVTC encourages its members to learn more about the NVTC-supported policies and initiatives listed below and how they may benefit your business.
Capital Gains Tax Exemption
CIT GAP Fund
Commonwealth Research Commercialization Fund (CRCF)
Angel Investor Tax Credit
One Stop Business Portal
Please note: The information below is provided as a resource for NVTC members so that you may learn more about the various new company formation and early-stage investment initiatives Virginia offers. The descriptions below are brief summaries of these initiatives, not complete program details. This information does not constitute legal advice and should not be relied upon as a substitute for visiting each of the state agency websites listed below. The external websites linked below are not maintained by NVTC.
Capital Gains Tax Exemption:
Entrepreneurs and investors who make qualified investments in early-stage technology, biotechnology and energy startups in Virginia through June 30, 2020, will be exempt from paying state income tax on their long-term capital gains throughout the life of the investment. If and when investments in these qualified companies are successful over the life of a company, any long-term capital gains attributable to the investment will be exempt from Virginia's income tax.
Please visit the Secretary of Technology's website at: http://technology.virginia.gov/initiatives/capital-gains-exemption-for-technology-businesses/
to learn more about this incentive encouraging entrepreneurs to come to Virginia to start their companies and investors to make substantial investments in Virginia companies over the next several years. The link above also provides information on how to be certified as an approved technology firm.
CIT GAP Fund
Through a public private partnership, the Center for Innovative Technology (CIT)
validates the science behind next-generation technology, biotechnology and energy startups across the state and leverages a modest public sector investment with private sector investments at a rate of 16 times the public outlay.
Since 2005, the CIT GAP Funds have underwritten critical and immediate first financing for tech startups with high potential for achieving rapid growth and generating significant economic return. The GAP Fund's search areas include software, telecommunications, semiconductors, media and entertainment, e-commerce, networking and equipment, electronics/instrumentation, industrial/energy, computers and peripherals, biomedical and life science applications.
to learn more about the investment criteria of this innovative program or to submit a business plan.
Commonwealth Research Commercialization Fund (CRCF)
NVTC is a strong advocate in Richmond for programs and initiatives to boost research and commercialization activity in Virginia. The goal is to promote innovation, grow and diversify Virginia's economy, provide Virginia's existing businesses with new products and services to use and offer customers, and create new technology startup businesses. One of NVTC's budget priorities in this effort is to ensure funding for the Commonwealth Research and Commercialization Fund (CRCF), and NVTC successfully advocated for $4.8 million in annual funding in FY13 and FY14. Unfortunately, Virginia's current budget shortfall has reduced CRCF funding to $2.3 million in annual funding in FY15 and $1.8 million in FY16.
The CRCF accelerates entrance of new products and services to the market, incentivizes collaboration between institutions of higher education and companies engaged in research in high-growth, emerging industries and provides new resources to attract and retain eminent researchers at Virginia universities. Since the inception of the CRCF program in 2011, 380 applications have been submitted across the Commonwealth. From these submissions, 146 awards have been announced. In addition to the economic benefits, the investments help attract talented faculty and graduate students to Virginia universities.
CRCF awards contribute to the Commonwealth's overall plan to enhance economic development through technology research and commercialization. As such, CRCF awards must further the goals set forth in the Commonwealth Research and Technology (R&T) Strategic Roadmap and align with industry opportunities identified therein. In addition to identifying research areas worthy of economic development and institutional focus, the Roadmap provides a framework for aligning key industry sectors within the state, as prioritized by the private sector, academia, the broader research community and economic development professionals.
Learn more about the CRCF at http://www.cit.org/initiatives/crcf/
and check out five facts
from its FY2014 Annual Report on the NVTC Blog.
Angel Investor Tax Credit
Virginia's Angel Investment Technology Tax Credit
encourages early-stage investment in technology, biotechnology and energy startups. While Virginia is one of 20 or so states that have angel credit, ours is among the most competitive with a 50 percent leverage of the first $50,000 an investor puts into a qualified Virginia technology startup.
One Stop Business Portal:
Virginia's Business One Stop
provides a single location for entrepreneurs to find and complete the needed forms to open their business, streamlining the process and paperwork entrepreneurs must undergo in seeking government permits to start a business. The system collects users' information, then provides and pre-fills the new business formation forms required by 80 percent of new businesses.
As part of the Business One Stop, the New Business Wizard walks entrepreneurs through the business formation process step by step, including business name registration; obtaining a federal employer identification number (FEIN); setting up state tax accounts, including employee withholding, unemployment tax and state sales and use tax; obtaining information on professional, occupational and specialty licenses; and getting contact information for local business licensing and zoning. As long as a user provides the system with complete and accurate information, the New Business Wizard will walk the user through the entire process of establishing a new business in Virginia, ensuring that each step is completed in the proper order.
While the goal of the Business One Stop is to be the single point of contact for all business entities in Virginia, the current system can only accommodate new business formation in Virginia. This is a new service that will be enhanced frequently.
to get started.
to see the requirements of a qualified business.
to visit the Virginia Department of Taxation website to apply to be designated as a qualified business for this tax credit.
Research and Development Expenses Tax Credit
During the 2011 Session, the Virginia General Assembly enacted legislation that established the Research and Development Expenses Tax Credit which is a refundable individual and corporate income tax credit for conducting qualified research and development in Virginia. The credit is allowed in the taxable year in which qualified research and development expenses are reported on the federal income tax return.
The Research and Development Expenses Tax Credit is comprised of a base credit and a supplemental credit that is available only to the extent that the total amount of credits granted for a fiscal year is less than the annual credit cap. The current credit cap is $7 million. The base credit is equal to: (i) 15 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the credit year, or (ii) 20 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the credit year if the Virginia qualified research was conducted in conjunction with a Virginia public or private college or university, to the extent such expenses exceed the taxpayer's Virginia base amount.
Additionally during the 2016 Session, the Virginia General Assembly established a $20 million R&D tax credit for larger businesses with Virginia research and development expenses in excess of $5 million. The new tax credit includes the same elements as described above for the alternative computation, except that it is not refundable and there is no annual limit on the maximum amount of credits allowed to the taxpayer.