My customer uses MSDN licenses on-premises for their UAT environment. Can I host a similar environment in my datacenter on a dedicated vm using customer’s msdn licenses?

Yes, provided the physical hardware is dedicated to the end-customer.

 

Note though that, except in Microsoft Azure, the only end-customer licenses that can run in a “shared” hardware environment (although the VMs may be dedicated to the customer) are volume licenses that are eligible for “license mobility through software assurance”. MSDN licenses don’t have “license mobility with SA” rights and are not allowed to run in a shared hardware environment (except in Azure).

The only exception to this is SQL Developer licenses (which is different to MSDN licenses).

 

Please refer to an extract from the Visual Studio 2015 Licensing White Paper below:

 UAT_-_Partner_Hosting_Options.jpg