N.C. Gen. Stat. § 105-187.1(a)(3c) defines “limited possession commitment” as “[l]ong-term lease or rental, short-term lease or rental, and vehicle subscriptions.” When applying for a North Carolina Certificate of Title for a motor vehicle purchased by a lessor for a limited possession commitment, the lessor may elect to pay the highway use tax to the Commissioner of Motor Vehicles or a person may elect to collect and remit the tax to the Secretary of Revenue on the limited possession commitment receipts derived from the vehicle.
| Type of Limited Possession Commitment | Definition | Tax Rate |
|---|---|---|
| Short-term lease or rental |
Defined in N.C. Gen. Stat. § 105-187.1(a)(7) as “[a] lease or rental of a motor vehicle or motor vehicles, including a vehicle sharing service, that is not a long-term lease or rental or a vehicle subscription.” |
8% |
| Vehicle subscription | Defined in N.C. Gen. Stat. § 105-187.1(a)(9) as “[a] written agreement that grants a person the right to use and exchange motor vehicles owned, directly or indirectly, by the person offering the agreement upon payment of a subscription fee, but it does not include a vehicle sharing service. The subscription fee must provide a person exclusive use of an agreed-upon number of motor vehicles at any given time during the full term of the subscription.” | 5% |
| Long-term lease or rental | Defined in N.C. Gen. Stat. § 105-187.1(a)(3) as “[a] lease or rental made under a written agreement to lease or rent one or more vehicles to the same person for a period of at least 365 continuous days and that is not a vehicle subscription.” A maximum tax may apply in some instances for a continuous limited possession commitment of a motor vehicle to the same person. | 3% |
For a business or person who is not registered with the Department and is required to collect and/or remit the motor vehicle lease and subscription tax, register online using the online business registration portal. A person registering to pay the motor vehicle lease and subscription tax for the first time should answer "Yes" to the question, "Will you provide motor vehicle leases or subscriptions?"
The motor vehicle lease and subscription tax is to be reported to the Department on the Form E-500F, Motor Vehicle Lease and Subscription Tax Return.
Additional Information for Motor Vehicle Lease and Subscription Tax
Technical References for Motor Vehicle Lease and Subscription Tax
- NC General Statutes - Chapter 105, Article 5A
- Alternate Highway Use Tax Bulletin (Legislative changes effective after January 1, 2020 are not incorporated.)
- Important Notices Issued by the Sales and Use Tax Division
Forms
Forms (10/2019 - Current)
| Form | Period | Description |
|---|---|---|
| Form E-500F | 10/2019 - Current | Motor Vehicle Lease and Subscription Tax Return |
| Form E-500F Instructions | 10/2019 - Current | Instructions - Form E500F |
| Form E-588F | 10/2019 - Current | Claim for Refund Motor Vehicle Lease or Subscription Taxes |
| Form E-588F Instructions | 10/2019 - Current | Instructions - Form E-588F |
Prior Period Forms
| Form | Period | Description |
|---|---|---|
| Form E-500F | Periods prior to 10/1/2019 | Motor Vehicle Lease and Rental Tax Return Form |
| Form E-500F Instructions | Periods prior to 10/1/2019 | Instructions - Form E-500F |
| NC-19 | Periods prior to 10/1/2019 | Claim for Refund of Taxes Form |