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Sales and Use Tax TAA 18A-009 License to Use Real Property

Question: Is a certain vendor agreement a license to use real property?

Answer: Yes.

Technical Assistance Advisement 18A-009 
Sales & Use Tax – License to Use Real Property Section 212.031, Florida Statutes (F.S.) 
Rule 12A-1.070, Florida Administrative Code (F.A.C.) XXX 
Dear XXX:

This is in response to your letter dated March 15, 2018, requesting this Department’s issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section 213.22, F.S., and Rule Chapter 12-11, Florida Administrative Code (F.A.C.), regarding the taxability of a certain “Vendor Agreement,” (the Agreement), and whether it constitutes a license to use real property, subject to sales and use tax. Your petition has been carefully examined, and the Department finds it to be in compliance with the requisite criteria set forth in Rule Chapter 12-11, F.A.C. This response to your request constitutes a TAA and is issued to you under the authority of section 213.22, F.S.


The issue is whether a certain vendor agreement is a license to use real property, whereupon, the proceeds retained by the Taxpayer are subject to sales and use tax.

Facts Provided by Taxpayer

Your request provides in pertinent part:

Taxpayer has the contractual right to operate a full-service food hall at its business location in XXX County, Florida. In order to operate efficiently, Taxpayer enters into a standard form agreement with various types of restaurants or small chefs (“Vendor(s)”) looking to expand their business. The arrangement between Taxpayer and Vendor is one in which Taxpayer leases the food hall, kitchen and dining equipment, furniture, and supplies. Meanwhile, the Vendor will have some of its own equipment and will share Taxpayer’s equipment and supplies with other Vendors in the hall.

The Vendors, using Taxpayer’s products, will sell the food products to customers on behalf of Taxpayer. Sales tax is collected and remitted by Taxpayer on the sales of the food products. Additionally, pursuant to the Agreement, all revenues from the food product sales become the sole property of Taxpayer.

At the end of each day the food hall is open, Taxpayer will go to each vendor and collect the entirety of the cash from each register. Taxpayer then reconciles the cash to the sales made by the Vendor. Once Taxpayer has done so, Taxpayer will pay each Vendor an amount for their services.

[You assert that] It is important to note that Taxpayer is not leasing any space or equipment to any Vendor. Taxpayer receives no consideration for the lease of any space or equipment either. This language can be specifically found in paragraph three (3) of the Agreement. . . .

Paragraph (3), of the Agreement, provides in pertinent part:

At all times during the term of this Agreement, Vendor will maintain its own separate legal identity. Vendor is an independent contractor of [the Taxpayer]. Vendor is not an employee or agent of [the Taxpayer] or its affiliates. . . .

Applicable Law & Discussion

Section 212.031(1)(a), F.S., provides in pertinent part:

It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of renting, leasing, letting, or granting a license for the use of any real property . . . . [emphasis supplied]

Section 212.031(2)(a), Florida Statutes, states:

The tenant or person actually occupying, using, or entitled to the use of any property from which the rental or license fee is subject to taxation under this section shall pay the tax to his immediate landlord or other person granting the right to such tenant or person to occupy or use such real property.

Rule 12A-l.070(4)(b), Florida Administrative Code, provides in part:

The tax shall be paid . . . on all considerations due and payable by the tenant or other person actually occupying, using, or entitled to use any real property to his landlord or other person for the privilege of use, occupancy, or the right to use or occupy any real property for any purpose. . . . [emphasis supplied]

The agreement, termed, “XXX” (the Agreement) does evidence provisions indicating the agreement is not to be construed as a lease. However, it is indisputable that the independent contractor vendors are operating their business on the real property of another. Licenses to use real property, “for any purpose,” are subject to sales and use tax.

Concluding Statement

The Agreement is a license to use real property, whereupon, the proceeds retained by the Taxpayer are subject to sales and use tax. The vendors are independent contractors permitted to sell their goods at the real property owned by the Taxpayer. Accordingly, the sales amounts retained by the Taxpayer are subject to sales and use tax.

This response constitutes a Technical Assistance Advisement under section 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice, as specified in section 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes, or judicial interpretations of the statutes or rules, upon which this advice is based, may subject similar future transactions to a different treatment than expressed in this response.

You are further advised that this response, your request and related backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of section 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your response should be received by the Department within 10 days of the date of this letter.

Respectfully, R. Clay Brower 
Technical Assistance & Dispute Resolution (850) 717-6306 
Control No: 61023

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