Under Florida's former commercial-rent tax, were vending commissions paid between a location owner, national vending company, and local operator taxable real-property rent?

Plain-English summary

For the 2004 ruling period, Florida treated the commissions in a three-party vending arrangement as taxable payments for leasing or licensing real property. The national vending company first obtained the right to place vending machines at client locations, then passed that location right to local vending operators.

The local operators owned and maintained the machines, stocked and cleaned them, held the money-box keys, removed the receipts, bore the machines' risk of loss, and paid the vending-product sales tax. Those facts made the local businesses the vending-machine “operators.”

The national company paid part of the vending revenue to each client location and received 15% to 20% of gross sales from the local operator. The Department treated the first arrangement as a lease or license from the location owner to the national company and the second as a sublease or sublicense from the national company to the local operator.

Two different taxes applied to two different transactions

The local operator was responsible for tax on the food, beverages, or other tangible goods sold through the machine under section 212.0515.

Separately, under the commercial-real-property tax then imposed by section 212.031:

• The national company owed tax on rent or commissions paid to the client location owner.
• The national company had to collect tax on commissions or other receipts from the local operator for the sublease or sublicense.

To prevent the same rent from being taxed twice, the national company could claim credit for tax paid to the location owner or give the owner a resale certificate and collect the tax on the sublicense. A registered local operator could also seek Department consent to remit the sublicense tax directly under section 212.183 and Rule 12A-1.0911.

Current-law note

This commercial-rent holding is historical. The Florida Department of Revenue stated in TAA 25A-010 that the Legislature repealed the tax imposed by section 212.031 effective October 1, 2025. No state sales tax or discretionary sales surtax applies to rent or license fees for rental or occupancy periods beginning on or after that date.

That repeal does not erase the separate sales-tax rules for products sold through vending machines, which were independently analyzed in TAA 04A-026.

What this means for you

Vending-machine operators

Machine ownership, access, maintenance duties, risk of loss, possession of the money-box key, and responsibility for receipts helped identify the local business as the operator responsible for vending sales tax.

Vending-service companies and location owners

For periods before the October 2025 repeal, a percentage-of-sales commission could be taxable rent when it paid for the privilege of placing and operating machines on real property. The contract's economic structure mattered more than calling the payment a commission.

Accountants and tax professionals

Keep vending-product sales separate from charges for location rights. The repeal affects the commercial-real-property rent tax, not the distinct tax analysis for food, beverages, and other goods sold through vending machines.

Common questions

Q: Who was the vending-machine operator?
A: The local business that owned and serviced the machines, held the money-box keys, removed receipts, bore risk of loss, and remitted sales tax on vending sales.

Q: What did the operator's commission buy?
A: Under the ruling, it paid the national vending company for a sublicense or sublease of space at the secured client location.

Q: Were payments to the location owner also treated as rent?
A: Yes for the 2004 period. The national company acquired the underlying location license from the client owner.

Q: How could the parties avoid pyramiding the former rent tax?
A: The national company could take a credit for tax paid upstream or issue a resale certificate and collect tax on the downstream sublicense.

Q: Does Florida still impose the section 212.031 commercial-rent tax?
A: Not for rental or occupancy periods beginning on or after October 1, 2025, according to the Department's later TAA 25A-010.

Citations and references

• Fla. Stat. § 212.0515 — vending-machine sales and operator requirements
• Fla. Admin. Code r. 12A-1.044 — factors identifying the vending-machine operator
• Fla. Stat. § 212.02(10)(i) — license to use real property
• Fla. Stat. § 212.031; Fla. Admin. Code r. 12A-1.070(1)(f), (9) — former commercial-rent tax, real-property licenses, and subleases
• Fla. Stat. § 212.183; Fla. Admin. Code r. 12A-1.0911 — authorized direct remittance
• Fla. Stat. § 213.22 — Technical Assistance Advisements
• Section 37, Chapter 2025-208, Laws of Florida — repeal cited by Florida TAA 25A-010

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-026
• Current-law source: TAA 25A-010

Original ruling text

SUMMARY

QUESTION 1: Are commissions paid to taxpayer, a national
vending operator, by local vending machine operators
considered consideration for real property rentals or
licenses, and are the commissions paid directly to the
location owners by taxpayer considered such rental or
licenses consideration.

ANSWER 1 - Based on Facts Below: Taxpayer is granting the
local operator a lease or license to use real property.
The taxpayer receives a lease or license to use real
property from its client location owners for the purpose of
operating vending machines and then creates a sublicense to
use the real property, or a sublease of the space leased.

Taxpayer is liable for tax on the rents paid to its
customer (the location owner) and must collect tax on the
commissions or other receipts received from the local
operator. To avoid pyramiding of the tax, the taxpayer may
take a credit on its sales and use tax return for tax paid
to its customer (location owner) or provide a resale
certificate to its customer as provided for by Rule 12A1.070(9), F.A.C.

Apr 09, 2004

Re: Technical Assistance Advisement 04A-026
XXX ("Taxpayer")
FEI # XX
Sales Tax
Lease or License to Use Real Property For Vending Services
Sections 212.515, 212.031, 212.02, F.S.
Rules 12A-1.044 and 12A-1.070, F.A.C.

Dear :

This is a response, styled a Technical Assistance Advisement, to

your letter of December 23, 2003. You have asked the Florida
Department of Revenue to provide clarification and guidance on
the application of sales tax for subcontracts for vending
services.

Background

Taxpayer is a national vending service corporation located in
XX. Taxpayer subcontracts with local vending machine operators
who sell products through vending machines based on taxpayer's
specifications at various locations in XX owned by taxpayer's
clients.

Relationship Structure:

Based on taxpayer's specifications the local operators buy
and use their own equipment at taxpayer's client
facilities. Local operator does the cleaning and restocking
of the machines, has access to them; the duty to repair;
title to the machines; risk of loss from damages to the
machines; and is the party possessing the keys to the money
box. The local operator shall have the key to the money
box and is responsible for removing the receipts. The
operator will be responsible for remitting all sales taxes
to the state of Florida. As owner of the machines, the
operator is responsible for maintenance, insurance and any
taxes on them.

Taxpayer compensates the machine operators based on a
portion of the vending revenues generated at the client
facility. Taxpayer pays its clients commissions or rents
out of the vending revenues.

A careful review of the contract titled, "Standard Vending
Services Agreement," submitted with the request for a Technical
Assistance Advisement, provides the following information that
is pertinent to your questions:

1. Responsibilities of the Local Operator - the local operator
   will provide and maintain vending machines at taxpayer's client
   location. Operator is responsible for all costs and expenses

associated with the vending services, including maintenance,
insurance and sales tax.

2. Compensation to taxpayer - local operator shall report all
   gross receipts from vending sales to taxpayer monthly, and pay
   taxpayer a commission of 15% to 20% of gross sales depending on
   the number of employees at the client's facility.

6. Client Commissions - taxpayer shall be responsible for paying
   cash commissions to the client out of its percentage of the
   gross sales received from local operator.

Requested Advisement and Taxpayer's Position

You ask the following questions:

1. When local operators pay taxpayer commissions on sales from
   vending installations, are these commissions considered rentals
   of tangible personal property, as defined in Rule 12A-1.071 or
   payments for licenses to use, or leases of, real property as
   defined Rule 12A-1.044, F.A.C. and s. 212.031, F.S.?

2. Are the commissions that taxpayer pays directly to clients
   where the vending machines are located subject to sales tax on
   real property under Rule 12A-1.044, F.A.C. and s. 212.031, F.S.?

Applicable Authority and Discussion

Section 212.0515, F.S., provides:

(1) As used in this section:

(a) "Vending machine" means a machine, operated by coin,
currency, credit card, slug, token, coupon, or similar
device, which dispenses food, beverages, or other items of
tangible personal property.

(b) "Operator" means any person who possesses a vending
machine for the purpose of generating sales through that
machine and who maintains the inventory in and removes the
receipts from that vending machine.

(2) Notwithstanding any other provision of law, the amount
of the tax to be paid on food, beverages, or other items of
tangible personal property that are sold in vending
machines shall be calculated by dividing the gross receipts
from such sales for the applicable reporting period by a
divisor, determined as provided in this subsection, to
compute gross taxable sales, and then subtracting gross
taxable sales from gross receipts to arrive at the amount
of tax due. The divisor is equal to the sum of 1.0645 for
beverage and food items, or 1.0659 for other items of
tangible personal property, except that for counties with a
0.5 percent sales surtax rate the divisor is equal to the
sum of 1.0686 for beverage and food items or 1.0707 for
other items of tangible personal property; for counties
with a 0.75 percent sales surtax rate the divisor is equal
to the sum of 1.0706 for beverage and food items or 1.0727
for other items of tangible personal property; for counties
with a 1 percent sales surtax rate the divisor is equal to
the sum of 1.0726 for beverage and food items or 1.0749 for
other items of tangible personal property; and for counties
with a 1.5 percent sales surtax rate the divisor is equal
to the sum of 1.0767 for beverage and food items or 1.0791
for other items of tangible personal property. If an
operator cannot account for each type of item sold through
a vending machine, the highest tax rate shall be used for
all products sold through that machine.

(3)(a) An operator of a vending machine may not operate or
cause to be operated in this state any vending machine
until the operator has registered with the department, has
obtained a separate registration certificate for each
county in which such machines are located, and has affixed
a notice to each vending machine selling food or beverages
which states the operator's name, address, and Federal
Employer Identification (FEI) number. If the operator is
not required to have an FEI number, the notice shall
include the operator's sales tax registration number. The
notice must be conspicuously displayed on the vending
machine when it is being operated in this state and shall
contain the following language in conspicuous type: NOTICE

TO CUSTOMER: FLORIDA LAW REQUIRES THIS NOTICE TO BE POSTED
ON ALL FOOD AND BEVERAGE VENDING MACHINES. REPORT ANY
MACHINE WITHOUT A NOTICE TO (TOLL-FREE NUMBER). YOU MAY BE
ELIGIBLE FOR A CASH REWARD.

(b) The department shall establish a toll-free number to
report any violations of this section. Upon a determination
that a violation has occurred, the department shall pay the
informant a reward of up to 10 percent of previously unpaid
taxes recovered as a result of the information provided. A
person who receives information concerning a violation of
this section from an employee as specified in s. 213.30 is
not eligible for a cash reward.

(4) A penalty of $250 per machine is imposed on an operator
who fails to properly obtain and display the required
notice on any machine. Penalties accrue interest as
provided for delinquent taxes under this chapter and apply
in addition to all other applicable taxes, interest, and
penalties....

Section 212.031, F.S., provides in pertinent part:

(1)(a) 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 unless such
property is:...

(c) For the exercise of such privilege, a tax is levied in
an amount equal to 6 percent of and on the total rent or
license fee charged for such real property by the person
charging or collecting the rental or license fee. The total
rent or license fee charged for such real property shall
include payments for the granting of a privilege to use or
occupy real property for any purpose and shall include base
rent, percentage rents, or similar charges. Such charges
shall be included in the total rent or license fee subject
to tax under this section whether or not they can be
attributed to the ability of the lessor's or licensor's
property as used or operated to attract customers. Payments

for intrinsically valuable personal property such as
franchises, trademarks, service marks, logos, or patents
are not subject to tax under this section. In the case of a
contractual arrangement that provides for both payments
taxable as total rent or license fee and payments not
subject to tax, the tax shall be based on a reasonable
allocation of such payments and shall not apply to that
portion which is for the nontaxable payments.

Section 212.02(10)(i), F.S. provides:

(i) "License," as used in this chapter with reference to
the use of real property, means the granting of a privilege
to use or occupy a building or a parcel of real property
for any purpose.

Rule 12A-1.044(1)(b), F.A.C., provides:

(b) For the purpose of this rule, possession of a vending
machine means either actual or constructive possession and
control. To determine if a person has constructive
possession and control the following indicia shall be
considered: right of access to the machine; duty to repair;
title to the machine; risk of loss from damages to the
machine; and the party possessing the keys to the money
box. If, based on the indicia set out above, the owner of
the machine has constructive possession and control, but
the location owner has physical possession of the machine,
then the operator shall be determined by who has the key to
the money box and is responsible for removing the receipts.
If both the owner of the machine and the location owner
have the keys to the money box and are responsible for
removing the receipts, then they shall designate in writing
who shall be considered the operator. Absent such written
designation, the owner of the machine shall be deemed to be
the operator.

Rule 12A-1.070(1)(f)1. and (9), F.A.C., provides:

(1)(f) "License," with reference to the use of real
property, means the granting of a privilege to use or

occupy a building or parcel of real property for any
purpose.

1. Example: An agreement whereby the owner of real property
   grants another person permission to install and operate a
   full service coin-operated vending machine, coin-operated
   amusement machine, coin-operated laundry machine, or any
   like items, on the premises is a license to use real
   property. The consideration paid by the machine owner to
   the real property owner for the license to use the real
   property is taxable. See Rule 12A-1.044, F.A.C., for the
   definitions of "amusement machine operator" and "vending
   machine operator."

(9) If a tenant or other person sublets or assigns his
interest in all of the leased or licensed premises, or
retains only an incidental portion of the entire premises,
then such tenant or other person may elect not to pay tax
on the prime lease or license, provided that such tenant or
other person shall register as a dealer and collect and
remit tax due on the sub-rentals or assignments and pay the
tax due on the portion of the rental charges or license
fees pertaining to any taxable space which he retains. If
the tenant or licensee elects not to pay the tax to his
landlord, or other person granting the right to occupy or
use such real property, he should extend to his landlord or
such other person a resale certificate.

In response, the local operator is the operator of the vending
machines and is responsible for collecting and remitting sales
tax on the gross sales collected from the machines, as provided
by Rule 12A-1.044, F.A.C., and section 212.0515, F.S. Here, the
taxpayer grants the local operator a lease or license to use
real property because the local operator is permitted to make
sales from its vending machines at locations that have been
secured by the taxpayer. See sections 212.02(10)(i), 212.031
F.S., and Rule 12A-1.070(1)(f), F.A.C. The taxpayer receives a
lease or license to use real property from its clients for the
purpose of operating vending machines and then creates a
sublicense to use the real property, or a sublease of the space
leased to the local operators.

The taxpayer is liable for the tax on the rental paid to its
customers and must collect tax on the rental or license payment
collected in the form of the commission or other receipts due
from the local operators. To avoid pyramiding of the tax on
real property rentals, the taxpayer may take a credit on its
sales and use return for tax paid to its customers (location
owners) or provide a resale certificate to its customers as
provided for by Rule 12A-1.070(9), F.A.C., and then collect the
tax from the local operators due on sublicense or sublease.
Section 212.183, F.S., and Rule 12A-1.0911, F.A.C., also permit
the local operators to provide the taxpayer with a copy of the
written consent provided by the Department to allow the
operators to directly remit the tax on the subleases or
sublicenses in lieu of paying the tax directly to taxpayer. The
operators must be registered as Florida dealers and remit sales
tax on the gross receipts from the vending machines in order to
apply for the written consent by the Department.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 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 s. 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 15 days of the date of this letter.

If you have any further questions with regard to this matter and
wish to discuss them, you may contact me directly at (850)9224839.

Sincerely,

Jean Davis
Senior Tax Specialist
Technical Assistance & Dispute Resolution
JD\
Control No: 58143