The Iowa Department of Revenue ruled that while a data center property owner and its tenant can both independently qualify for the sales tax exemption for data center businesses, the property owner and the tenant cannot aggregate their investments to meet the minimum investment requirement. Iowa law provides a sales tax exemption for data center businesses for the price of computers and equipment necessary for maintenance and operation of the data center business and property. Iowa Code § 423.3(95). To qualify for the exemption, the businesses must meet certain requirements, including a minimum investment made at an Iowa location of two hundred million dollars within the first six years of operation in Iowa. The DOR found that the language of the exemption (“an entity whose business among other businesses, is to operate a data center”), indicated that a data center business consists of a singular entity and therefore did not allow for two data centers to both qualify under the same set of facts. The DOR further found that the tenant and property owner could not aggregate their investments to meet the minimum threshold because the statute does not contain words such as “collective,” “aggregate investment,” or similar language. However, the DOR found that a data center property owner and a data center tenant based at the same physical location can both qualify for the exemption as long as they each independently meet the minimum requirements.

In the Matter of T5 Data Centers LLC 3344 Peachtree Rd NE Atlanta, Georgia 30326, Iowa Declaratory Order No. 439443.