Tax treatment of annual membership fees paid to a professional body

Jan 06, 2020

Additional guidance published by Revenue illustrates Revenue’s administrative treatment of professional membership fees. This guidance reflects the view we have communicated to members since the legislation on this area changed in 2011.

Two new paragraphs are included in the guidance covering fees that are commercially necessary and fees that are an indispensable condition of the tenure of employment.   Additional examples and content are also added which may be helpful when determining the correct tax treatment of professional membership fees.

As a reminder, since 2011, if an employer pays a professional membership fee or registration fee on behalf of an employee/director, PAYE, PRSI and USC applies to the value of the professional membership fee. Essentially the fee is included as notional pay/benefit in kind through payroll for the employee/director. Section 118 (5E) TCA 1997 is the relevant legislation.

Section 114 TCA 1997 provides for a tax deduction in respect of the professional membership fee if it is incurred wholly, exclusively and necessarily in the performance of the duties of employment.

For ease of administration and to avoid unnecessary claims under section 114 TCA 1997, in certain circumstances, income tax, PRSI and USC does not need to be deducted.  The circumstances in which Revenue considers that the professional membership fee qualifies under section 114 TCA 1997 and their administrative treatment of professional membership fees is set out in their guidance

Revenue also recently published guidance on the general rule as to deductions of expenses in employment.