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AZ-500: What Happens to Virtual Machines During Azure Subscription Transfer Between Tenants?

Do Azure VMs Stop Running When Transferring Subscription to New Azure AD Tenant?

Learn why Azure VMs continue running during subscription transfers to new Azure AD tenants for your AZ-500 exam. Understand the impact on managed identities, RBAC assignments, and authentication while VMs remain operational throughout the transfer process.

Question

Transferring a subscription to a new Azure AD tenant will cause Azure VMs to stop running.

A. FALSE
B. TRUE

Answer

A. FALSE

Explanation

The correct answer is A. FALSE. Azure Virtual Machines continue running without interruption when a subscription is transferred to a new Azure AD tenant. The compute resources themselves are not affected by the tenant change.

VMs will not stop running, but you will have to re-enable any managed identities associated with the VMs.

Why VMs Continue Running

Azure VMs operate at the infrastructure layer and are not directly dependent on the Azure AD tenant for their core functionality. The underlying compute, storage, and networking resources remain intact during a subscription transfer. The VMs maintain their:

  • Running state and workloads
  • Network connectivity within the virtual network
  • Storage attachments and data
  • Basic operational functionality

Impact on Managed Identities

The primary impact of tenant transfer occurs with managed identities assigned to the VMs. Managed identities are Azure AD objects that provide VMs with an identity to authenticate against Azure services without storing credentials in code. When a subscription moves to a new tenant:

  • System-assigned managed identities are automatically deleted and must be recreated after the transfer
  • User-assigned managed identities that were in the source tenant become inaccessible
  • Applications or services relying on managed identities for authentication will experience failures until identities are reconfigured

Additional Considerations

Beyond managed identities, subscription transfers affect other identity-related configurations:

  • RBAC assignments referencing users or groups from the old tenant are removed
  • Azure AD authentication for applications may require reconfiguration
  • Key Vault access policies linked to the old tenant need updates
  • Service principal authentication may require adjustments

Post-Transfer Recovery Steps

After completing the subscription transfer, administrators must:

  1. Re-enable system-assigned managed identities on affected VMs
  2. Recreate or reassign user-assigned managed identities
  3. Reconfigure RBAC assignments for the new tenant
  4. Update application authentication settings
  5. Verify and restore access to dependent Azure services

The key point for AZ-500 exam purposes is that while VMs maintain operational continuity, the identity and access management layer requires immediate attention to restore full functionality.

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