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Income taxation of non-profit organisations

Activities of non-profit organisations often consist of

  • tax-exempt non-profit activities
  • tax-exempt fund-raising
  • taxable business activities
  • real estate income.

Associations and foundations must itemise the income and expenses of these functions in accounting and on their tax return.

What income is tax-exempt for non-profit organisations?

Tax-exempt income for non-profit organisations includes

  • membership fees
  • dividends
  • interest
  • donations
  • subsidies received for non-profit activities.

In addition, the following income is tax-exempt subject to certain conditions:

  • rental income from apartments in a housing company, unless more than 50 per cent of the apartment is used for the organisation’s business activities 
  • capital gains, such as sales gains from a real estate unit, unless the divested assets are part of the organisation’s business activities.

The following income is also tax-exempt if the income is obtained to finance non-profit activities and the activities do not meet the characteristics of business activities.

Food service and sales income received from events organised by an association or foundation or in conjunction with an association’s or foundation’s event. The income must come from lotteries, sales events, sports competitions, dance or other recreational events, or other comparable activities organised by an association or foundation.

Examples of tax-exempt income:

  • tickets to events
  • sales of sports programmes or similar, and sales of advertisements for these booklets
  • sales of food and refreshments, as well as alcoholic beverages, during an event
  • advertising sales for advertisements only displayed during an event, such as movable advertising signs
  • advertisements on sportswear
  • sales of goods during an event.

Note: If an association repeatedly provides catering services at events organised by others, these activities are usually regarded as business activities. Providing catering services at a single event is not regarded as a business activity.

The collection of merchandise and related flea market sales, when the merchandise sold has been received as donations and has only been restored to a minor extent.

Leasing out a table at a flea market is not tax-exempt. It is a taxable business activity, because it is regarded as the provision of sales locations. 

Income received from membership magazines, websites, yearbooks or, for example, seasonal publications that demonstrate activities.

It is characteristic to a membership magazine or other publication that

  • it covers membership-related matters that are important for the organisation
  • it serves the organisation’s non-profit purpose
  • its purpose is not fund-raising only
  • its content mainly consists of editorial content and not of advertisements, for example
  • the magazine is primarily distributed on the basis of memberships and not subscriptions
  • non-member subscribers are few.

Income from the sale of sympathy and greeting cards and other badges, such as pins, chest badges and stickers, in the case of small-scale sales and when the buyer rather intends to support the activities than acquire the product for their personal use.

Example: A sports club sells, by means of volunteer work, their own pennants, pins and stickers by a total of EUR 15,000 during their anniversary year. The purchase price of a single pin and sticker is EUR 0.10 for the club, and the sales price is EUR 1.50. The purchase price of a single pennant is EUR 2, and the sales price is EUR 20. Sales are tax-exempt activities with the intention of supporting the club.

Income from products or services made during care or handicraft activities or for educational purposes at a hospital, prison, rehabilitation institute or other similar institute.

Income received from organising a bingo game.

Note: The taxability of activities and income is always assessed separately in conjunction with taxation. The assessment includes the type and scope of activities.

On what income do non-profit organisations pay tax? 

Non-profit organisations pay income tax on

  • income received from business activities
  • income received from a real estate unit, if the real estate unit has been used for purposes other than general or non-profit activities. Income from the sale of wood is also regarded as income received from a real estate unit. 

Tax rates are

  • business income 20%
  • real estate income 4.78% in 2023
  • real estate income 4.74% in 2024

Organisations only need to pay income tax on profit from taxable activities, not on profit from all activities. Profit is calculated so that deductible expenses are deducted from taxable income. The Finnish Tax Administration takes allowable losses from previous years into account in calculating taxable income.

Activities are usually taxable business activities, for example, if 

  • an association or foundation sells products or services that correspond with the products or services of companies operating in the same market
  • an association or foundation uses salaried employees to carry out their activities
  • activities are continuous
  • operational expenses are covered by income received from the sale of products or services.

Examples of business activities of an association or foundation:

  • exhibitions organised annually for people other than members
  • publishing activities targeted at people other than members
  • sales of social and healthcare services in the market environment
  • sales of products and services at a fair market price.

If activities are business activities, they cannot be regarded as non-profit activities.

The taxability of income from a real estate unit or its part is determined according to the use of the real estate unit. For example, rental income and income from wood sales are income received from a real estate unit. 

For taxation, it must be assessed what part of the use of the real estate unit is

  • general or non-profit use
  • other than general or non-profit use
  • use for the business activities of the association or foundation in question.

A real estate unit is in general use if it serves as a public school or library, a government agency or a public hospital. Non-profit use includes non-profit use by a non-profit association or foundation and activities where an association or foundation leases out the real estate unit for non-profit use to another non-profit association or foundation. 

Rental income is taxable, insofar as it has been received from use other than general or non-profit use. This type of other use includes activities where a real estate unit is leased out

  • to association members for recreational use
  • for business activities
  • for different private or festive events
  • for use as an apartment.

Example: An association leases out its real estate unit for private events on 30 days a year. Income tax must be paid on income received from leasing activities. However, the association can deduct the relevant expenses from its taxable real estate income. As a result, the association can deduct the share of the leasing period from the real estate unit’s full-year expenses (30 days / 365 days).

If more than half of a real estate unit is used for the business activities of the association or foundation in question, all income received from the real estate unit is taxable business income.

The share of different purposes of use is usually assessed on the basis of the floor area or operating period.

Capital gains received from the sale of a real estate unit are not income produced by the real estate unit. Capital gains received from the sale of a real estate unit owned by a non-profit association or foundation is tax-exempt income. Furthermore, income received from the sale of an apartment in a housing company is tax-exempt income for non-profit associations and foundations.

If more than half of a real estate unit is used for the business activities of the association or foundation in question, all income received from them is taxable business income.

Only expenses arising from taxable activities are tax deductible. In other words, expenses cannot be deducted if they are not associated with taxable activities.

Expenses arising from the activity in question can be deducted from taxable business income or real estate income. The share associated with taxable activities can be deducted from depreciation.

Non-profit activities and taxable activities are often carried out in the same facilities and by the same employees. In this case, an association or foundation can deduct the share of these general expenses as business expenses or expenses associated with taxable real estate income. The expenses must be divided according to the real estate unit’s floor area or working hours, for example. The selected method must also be followed in taxation during next years.


Non-profit organisations can apply for tax relief for their taxable income. As a result, the organisation can be fully or partly exempted from income tax. See requirements and application instructions for a tax relief.

Page last updated 1/1/2024