Vermont § 5922 - Financial services development tax credit

§ 5922. Financial services development tax credit

• (a) Definitions. As used in this subchapter: (1) “Qualified person” means any corporation, partnership, limited liability company,
  sole proprietor, or trust primarily engaged in business as an investment advisor and
  registered as such with the Federal Securities Exchange Commissions or primarily engaged
  in investment management, or an investment company. (2) “Investment management” means the provision of investment management, research, distribution,
  or administration services to or on behalf of an investment company, including trustees,
  and sponsors or participants of employee benefit plans that have accounts in an investment
  company, or to or on behalf of an investment advisor. (3) “Investment company” means any person registered under the Federal Investment Company
  Act of 1940 (the Act) or a company that would be required to register as an investment
  company under the Act except that such person is exempt to such registration pursuant
  to Section 3(c)(1) of the Act. (4) “Qualified payroll expense” means compensation for performance by the qualified person’s
  employees related to investment advisor, investment management, or investment company
  services in Vermont. (5) “Apportioned ratio” means the revenue from assets under management or other investment
  business for non-Vermont residents who are unrelated persons, divided by the total
  revenue from assets under management or other investment business for unrelated persons
  during the tax year. (6) “Apportioned payroll ratio” means qualified payroll expense divided by total payroll
  expense compensation for employees’ services related to investment advisor, investment
  management, or investment company services during the tax year. (7) “Unrelated persons” means any person other than the person claiming the credit under
  this section, or his or her spouse, parent, child, or sibling. (b) Non-Vermont revenue tax credit. Subject to subsections (c) and (d) of this section, a qualified person shall be allowed
  to claim against its income tax, from sources defined in subsection (a) of this section,
  a credit in the amount of the qualified person’s Vermont income tax liability from
  sources defined in subsection (a), times the apportioned ratio and the payroll ratio.
  As used in this subsection, “Vermont income tax liability” means for an individual,
  the taxpayer’s Vermont income tax liability as determined under this chapter multiplied
  by the percentage of the taxpayer’s adjusted gross income from sources defined in
  subsection (a) of this section; and for a corporation, the taxpayer’s Vermont tax
  liability as determined under this chapter multiplied by the percentage of the taxpayer’s
  Vermont net income from sources defined in subsection (a) of this section. (c) Claims. A credit available in subsection (b) of this section to a qualified person who is
  a partnership, limited liability company, subchapter S corporation, or trust may not
  be claimed by the entity, but may be claimed by the entity’s partners, members, shareholders,
  or beneficiaries on their distributive share of the income from sources defined in
  subsection (a) of this section. The credit allowed shall be the pre-credit tax on
  the distributive share of income, multiplied by the qualified person’s apportioned
  ratio and payroll ratio. No credit shall be allowed under this section based upon
  income received by the claimant for services as an employee. (d) Limitations. The credit shall be available in the tax year of the income used to calculate the
  credit. (1) The credit may not be applied to reduce the Vermont income tax liability of the person
  claiming the credit, from sources defined in subsection (a) of this section, to less
  than 25 percent of pre-credit tax. (2) Unused credit may not be carried forward or back. (3) The credit may not be applied as a result of transferring employees or assets among
  affiliated companies or persons. The Commissioner may adopt rules to define affiliates. (e) Recapture. In the event a qualified person ceases to employ in Vermont, for a period in excess
  of 120 consecutive days, at least 65 percent of the number of employees it employed
  in Vermont as of the year a tax credit was taken under this section, there shall be
  imposed upon such person a recapture penalty equal to a percentage of the total credits
  taken, computed in accord with the following table: 2 or less 100% More than 2 and up to 4 50% More than 4 but no more than 6 25% The recapture shall be reported on the taxpayer’s income tax return for the tax year
  in which the 120-day threshold is exceeded. (f) Applicability of credit. A qualified person who claims and is awarded tax credits under this section shall
  report, on a form approved by the Commissioner of Taxes, such person’s qualified payroll
  expenses as of July 1, 1996. No credits shall be available for taxable years beginning
  on or after January 1, 2007 unless the General Assembly specifically authorizes the
  allowance of credits under this section for taxable years 2007 and after. The Department
  of Economic Development shall evaluate the effectiveness of the financial services
  development tax credit. (Added 1995, No. 184 (Adj. Sess.), § 10; amended 1999, No. 49, § 96c, eff. June 2, 1999; 2001, No. 138 (Adj. Sess.), § 1, eff. June 21, 2002; 2003, No. 70 (Adj. Sess.), § 43, eff. March 1, 2004; 2011, No. 139 (Adj. Sess.), § 35, eff. May 14, 2012; 2021, No. 105 (Adj. Sess.), § 546, eff. July 1, 2022.)