Sales/Use/Indirect:
Washington Advisory Addresses Taxation of International Investment Management Services

Excise Tax Advisory 3183.2022, Wash. Dept. of Rev. (10/17/22). The Washington Department of Revenue (Department) issued an excise tax advisory reflecting legislation enacted in 2019 that effective July 1, 2019, revised who is eligible to receive Washington’s preferential state business and occupation (B&O) tax rate for international investment management services (IIMS) [see ESB 6016, Chapter 426, Laws of 2019; Special Notice: Taxation of International Investment Management Companies, Wash. Dept. of Rev. (6/12/19); and previously issued Multistate Tax Alert for more details on these law changes]. According to the Department, this advisory addresses qualifications for the IIMS B&O tax rate as of July 1, 2019, and it does not address qualifications for the IIMS B&O tax rate for business activities occurring prior to July 1, 2019. The advisory generally explains that a person is considered engaged in providing qualifying international investment management services if it meets the following conditions, as defined under applicable state law:

• The person is engaged primarily in the business of providing investment management services;
• At least 10% of the person’s gross income is derived from providing investment management services to a qualifying collective investment fund;
• More than 25% of the person’s employees are located in Washington; and
• The person is a member of an affiliated group that collectively has:
• At least ten offices located in at least eight foreign countries;
• At least 500 full-time employees worldwide;
• More than $400 million of worldwide gross revenue during the entire current or immediately preceding calendar year; and
• More than $200 billion in average assets under management during the entire current or immediately preceding calendar year.

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