diff --git a/nova/tests/unit/virt/libvirt/test_vif.py b/nova/tests/unit/virt/libvirt/test_vif.py
index 24fe95a98efb..8d3f5e9d7d3b 100644
--- a/nova/tests/unit/virt/libvirt/test_vif.py
+++ b/nova/tests/unit/virt/libvirt/test_vif.py
@@ -1206,7 +1206,26 @@ class LibvirtVifTestCase(test.NoDBTestCase):
 
     @mock.patch.object(pci_utils, 'get_ifname_by_pci_address',
                        return_value='eth1')
-    def test_hw_veb_driver_macvtap(self, mock_get_ifname):
+    @mock.patch.object(host.Host, "has_min_version", return_value=True)
+    def test_hw_veb_driver_macvtap(self, ver_mock, mock_get_ifname):
+        d = vif.LibvirtGenericVIFDriver()
+        xml = self._get_instance_xml(d, self.vif_hw_veb_macvtap)
+        node = self._get_node(xml)
+        self.assertEqual(node.get("type"), "direct")
+        self._assertTypeEquals(node, "direct", "source",
+                               "dev", "eth1")
+        self._assertTypeEquals(node, "direct", "source",
+                               "mode", "passthrough")
+        self._assertMacEquals(node, self.vif_hw_veb_macvtap)
+        vlan = node.find("vlan").find("tag").get("id")
+        vlan_want = self.vif_hw_veb["details"]["vlan"]
+        self.assertEqual(int(vlan), vlan_want)
+
+    @mock.patch.object(pci_utils, 'get_ifname_by_pci_address',
+                       return_value='eth1')
+    @mock.patch.object(host.Host, "has_min_version", return_value=False)
+    def test_hw_veb_driver_macvtap_pre_vlan_support(self, ver_mock,
+                                                    mock_get_ifname):
         d = vif.LibvirtGenericVIFDriver()
         xml = self._get_instance_xml(d, self.vif_hw_veb_macvtap)
         node = self._get_node(xml)
diff --git a/nova/virt/libvirt/designer.py b/nova/virt/libvirt/designer.py
index 0d4a6efe6742..67514c931bb6 100644
--- a/nova/virt/libvirt/designer.py
+++ b/nova/virt/libvirt/designer.py
@@ -107,14 +107,14 @@ def set_vif_host_backend_hw_veb(conf, net_type, devname, vlan,
     """
 
     conf.net_type = net_type
+    conf.vlan = vlan
     if net_type == 'direct':
         conf.source_mode = 'passthrough'
         conf.source_dev = pci_utils.get_ifname_by_pci_address(devname)
         conf.driver_name = 'vhost'
-    else:
+    else:  # net_type == network_model.VNIC_TYPE_DIRECT
         conf.source_dev = devname
         conf.model = None
-        conf.vlan = vlan
     if tapname:
         conf.target_dev = tapname
 
diff --git a/nova/virt/libvirt/vif.py b/nova/virt/libvirt/vif.py
index 094a2a1dad2c..e3952634d880 100644
--- a/nova/virt/libvirt/vif.py
+++ b/nova/virt/libvirt/vif.py
@@ -46,6 +46,8 @@ CONF = nova.conf.CONF
 
 # vhostuser queues support
 MIN_LIBVIRT_VHOSTUSER_MQ = (1, 2, 17)
+#  vlan tag for macvtap passthrough mode on SRIOV VFs
+MIN_LIBVIRT_MACVTAP_PASSTHROUGH_VLAN = (1, 3, 5)
 
 
 def is_vif_model_valid_for_virt(virt_type, vif_model):
@@ -327,6 +329,11 @@ class LibvirtGenericVIFDriver(object):
             conf, net_type, profile['pci_slot'],
             vif_details[network_model.VIF_DETAILS_VLAN])
 
+        # NOTE(vladikr): Not setting vlan tags for macvtap on SR-IOV VFs
+        # as vlan tag is not supported in Libvirt until version 1.3.5
+        if (vif['vnic_type'] == network_model.VNIC_TYPE_MACVTAP and not
+                host.has_min_version(MIN_LIBVIRT_MACVTAP_PASSTHROUGH_VLAN)):
+            conf.vlan = None
         designer.set_vif_bandwidth_config(conf, inst_type)
 
         return conf
@@ -636,6 +643,8 @@ class LibvirtGenericVIFDriver(object):
         pass
 
     def plug_hw_veb(self, instance, vif):
+        # TODO(vladikr): This code can be removed once the minimum version of
+        # Libvirt is incleased above 1.3.5, as vlan will be set by libvirt
         if vif['vnic_type'] == network_model.VNIC_TYPE_MACVTAP:
             linux_net.set_vf_interface_vlan(
                 vif['profile']['pci_slot'],
@@ -859,6 +868,8 @@ class LibvirtGenericVIFDriver(object):
         pass
 
     def unplug_hw_veb(self, instance, vif):
+        # TODO(vladikr): This code can be removed once the minimum version of
+        # Libvirt is incleased above 1.3.5, as vlan will be set by libvirt
         if vif['vnic_type'] == network_model.VNIC_TYPE_MACVTAP:
             # The ip utility doesn't accept the MAC 00:00:00:00:00:00.
             # Therefore, keep the MAC unchanged.  Later operations on