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Your membership fees are tax-deductible 

Your trade union membership fees are tax-deductible, because the membership fees are considered expenses for the production of income. The right to deduct membership fees from your taxes is a member’s right, not the union’s right. 

What is the tax deduction right based on? 

A trade union’s membership fees can be deducted from taxes because it is an expense for the production of income. This is because the trade union performs activities such as negotiation collective agreements and ensuring that workplaces follow workers’ rights. The right to deduct collective industrial organisations’ membership fees and unemployment funds’ fees from taxes is defined in the Income Tax Act (sections 31 and 95). 
Collective industrial organisations are defined as organisations whose main purpose is to make binding agreements on the terms used for employment agreements and employment relationships. The Tax Administration’s examples of collective industrial organisations include SAK, STTK, Akava and the member associations of the Confederation of Finnish Industries. 

For example, PAM’s activities include negotiating with employers’ associations to set minimum employment terms for the collective agreements of various sectors. Companies must follow the terms of employment, and PAM monitors that they are followed. 
PAM and the employers’ associations advise their members on how to follow the terms of employment and resolve disputes if they cannot be resolved in the workplace.

If you pay a membership fee only to support the trade union, it is not tax-deductible. However, if the membership fee can be considered a requirement for a profession or conducting business, or otherwise an expense for the production of income, it can still be deducted from taxes. 

PAM informs the Tax Administration of membership fees  

The tax deduction for trade union membership fees is not included in the Tax Administration’s automatic deduction for expenses for the production of income. In other words, the deduction for membership fees is added to the Tax Administration’s automatic base deduction. PAM informs the Tax Administration of membership fees paid by members each year. This means that the membership fee deductions will usually be included in your pre-completed tax return. 

What is a tax deduction?  

A tax deduction means an amount of money that reduces your amount of taxable income or taxes. A member’s tax deduction right means that the amount of income used to calculate your income tax is reduced by the amount of your membership fees. The final amount of taxes is calculated based on your tax percentage and your remaining income.  

Tax deduction example  

A worker has a salary of about EUR 2,000 per month and pays 1.5% of their gross salary in PAM membership fees. The member pays EUR 375 per year in membership fees. When that amount is deducted from the taxable income, the amount of payable taxes is reduced by about EUR 110 compared to the amount before the deduction. This means that the net cost of the membership fees is about EUR 265. 

You can check the tax effect of your trade union membership fees on the Tax Administration’s tax percentage calculator.
You can check the amount of your PAM membership fees on the membership fee calculator. 

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