Update on the Elimination of Redundant Municipal Business Licenses

As a result of HB 235 of 2019, as amended and championed by the Delaware Association of REALTORS®, you are no longer required to obtain business licenses for municipalities that charge a business license fee outside of your brokerage’s physical location.

Please be sure to read this entire document because there are exceptions allowing taxes to be charged.

Per the legislation, as of July 1, 2020, any county, municipality, or other political subdivision of the state is prohibited from imposing local business licensing requirements, fees, or taxes on real estate brokers, associate brokers, brokerage organizations, or real estate salespersons for any of the following activities in that jurisdiction:

1. Listing real estate for sale
2. Representing buyers in the purchase of real estate
3. Rental of real estate for property owners or tenants unless the property is in a city with a population over 50,000 (as of today, the City of Wilmington is the only city that qualifies)

However, if a real estate broker, associate broker, brokerage organization, or real estate salesperson has a physical office in a jurisdiction that charges for business licenses, taxes, or fees, they MAY still be required to pay those fees and taxes on the same basis as other businesses with physical offices in that jurisdiction. Please check with the municipality in which your brokerage’s physical office is located to see if you must pay for a business license.

• Example 1: If you operate a brokerage organization in the Town of Bethany Beach, the Town of Bethany Beach requires a business license at the cost of $250.00. You are required to pay this business license fee as your physical office is located within the Town of Bethany Beach. As a result of the legislation, if your company conducts business in a surrounding municipality, you no longer need to obtain separate licenses for every municipality. You only need a license where your physical office is located.
• Example 2: If you are a real estate broker, associate broker, or real estate salesperson, you MAY still be required to obtain a business license and pay local fees or taxes if your physical brokerage (your real estate license will state your brokerage’s physical address) is within a municipality’s jurisdiction that requires business licenses or charges local fees or taxes. As a result of the legislation, you no longer need to obtain separate licenses in every municipality in which you practice—only within the jurisdiction where your physical brokerage is located IF they require you to have a business license. In addition, a municipality may have ordinances that permit them to charge a wage tax calculated on the same basis as other wages earned in that jurisdiction.
• Example 3: Your office is not in the City of Wilmington, but you handle rentals in the City of Wilmington. You are still required to obtain a City of Wilmington business license and pay the City wage tax (earned income tax) on that part of your commissions or other income attributable to time spent or services rendered in the City.
• Example 4. You handle sales in the City of Wilmington. You are still required to pay the City wage tax (earned income tax) on that part of your commissions or other income attributable to time spent or services rendered in the City. This applies whether or not you have a physical office in the City of Wilmington.

Note: The information above is specifically in regard to municipal business licenses, taxes, and fees. The State of Delaware still requires a state business license to operate by “any person or entity conducting a trade or business.” It is very important to note that real estate salespersons are EXEMPT from the state business license requirement at per a 1991 memo from the Division of Revenue. Therefore, the Brokerage organization is still required to obtain a State of Delaware business license. Individual salespeople and associate brokers do not need a State of Delaware business license.

Please understand that many of our local municipalities are aware of this legislation but do not have the capability to automatically take you out of their database. If you paid local business license fees to a municipality in the past, where your physical office is not located today, contact them directly to be removed.

We hope these clarifications make this very clear. Please do not hesitate to contact us directly if you have additional questions or concerns.