SQL Views – no variables?

You are correct. Local variables are not allowed in a VIEW.

You can set a local variable in a table valued function, which returns a result set (like a view does.)

http://msdn.microsoft.com/en-us/library/ms191165.aspx

e.g.

CREATE FUNCTION dbo.udf_foo()
RETURNS @ret TABLE (col INT)
AS
BEGIN
  DECLARE @myvar INT;
  SELECT @myvar = 1;
  INSERT INTO @ret SELECT @myvar;
  RETURN;
END;
GO
SELECT * FROM dbo.udf_foo();
GO