Măsurile fiscale

GEO 114/2018 again in the attention of gambling organizers

by Loredana Marlen DUMITRU, Avocat Stagiar, C.A. Mihai Catalin LUCA

Although GEO 114/2018 on the establishment of measures in the field of public investments and fiscal-budgetary measures, the modification and completion of some normative acts and the extension of deadlines no longer needs any presentation, in the context of the recent changes on the national political scene and of the public statements of the new majority regarding its intention to reject it in the parliamentary procedure, we consider it appropriate to pay attention to the changes that have occurred in the activity of organizing the games of gambling, of their effects and not least, of the reasons why the regulations in force continue to create imbalances both in the field of gambling (ex: increasing taxation and bureaucracy, reducing competitiveness, hindering the implementation of legislative reforms, increasing personnel costs), and by referring to the business environment as a whole and not in what the the latter, of the considerations for which a re-evaluation of these measures in this new context would be very welcome.
We recall that GEO 114/2018 was adopted at the end of last year and has been harshly criticized by both the gambling industry and the entire business environment in Romania.
In the field of gambling, one of the measures that aroused the most reactions was the establishment of a new tax regarding the remote gambling organizers, in the amount of 2%, applied to the total participation fees collected monthly. from the participants to the gambling by the organizers.
According to the provisions of art. 1 paragraph (3) of Order no. 38 from January 15, 2019 for approving the method of calculating the monthly tax provided in art. 53 of the Government Emergency Ordinance no. 114/2018. The total participation fees collected monthly are defined as any transfer from the bank account or similar of the players to their game accounts on the gaming platform.
The fee is due on each deposit, and not on the total of the amounts rolled (as there were concerns in practice that they would not be excluded). The tax is one per transaction and not for profit or profit. Thus, even in the case of a loss registration (so in case the gambling organizer does not obtain any advantage as a result of the transaction made by the participant in the account on his gaming platform, registering a loss practically), the organizer is charged as such.
On the other hand, similar to other economic activities, gambling organizers pay besides this tax and profit tax (16%, for taxpayers resident in Romania, except for casinos, where this tax cannot be lower than 5% of the income realized).
The profit is calculated according to art. 19 of the Fiscal Code, as a difference between the revenues and expenses recorded according to the applicable accounting regulations, from which the non-taxable income and the tax deductions are deducted and to which the non-deductible expenses are added. Thus, even if the remote gambling organizer makes a profit as a result of collecting the participation fees for gambling, this win is usually reflected in the amount of profit that the gambling organizer registers. , for which he anyway already pays tax.
Moreover, we note that this 2% tax works as a tax on turnover (which represents, as opposed to profit, the total amount of receipts without taking into account the expenses involved in carrying out the activity), and not as a profit tax, although it also results in profit. In conclusion, the same receipts are taxed both as an initial component of the turnover of the remote gambling organizer and as a component of the registered profit, after deducting from the turnover the personnel expenses, the winnings / prizes granted, raw material etc.
This fiscal approach leads to a painful conclusion: these measures, in addition to visibly slowing down new investments, which in turn generate revenues for the state, lead to a restriction of activity, able to create even more economic imbalance.
Because the impact is not only felt by the remote gambling organizers, and the traditional gambling organizers have suffered as a result of the coming into force of the Ordinance 114/2019, by increasing the authorization fee for slot machines machine. According to the new provisions, the fee for the exploitation authorization for each slot machine-type game A has been increased from Eur2600/year, as provided in the previous regulation, to Eur3600/year.
We also recall that with the amendments made by GEO 114/2018, the bonus for the payment in full of the annual fee related to the operating authorization for the gambling characteristic of casinos and poker clubs, as well as for gambling, was eliminated. slot-machine type.
Demonization of the gambling field and unjustified overcharging on false or misunderstood considerations regarding excessive profitability, associating the supposed profits of the companies with the mischief and greed, all appreciated in a summary manner in relation to figures that do not reflect the exact financial situation of the companies with such as an object of activity, they hit an industry that even if it was not based on a productive activity, but on a collection of participation fees from the players (as stated in the explanatory statement for the approval of GEO 114/2018), only last year it registered direct income of hundreds of millions of euros to the state budget, which generates indirect taxes, taxes on wages and ensures tens of thousands of jobs.
Another important change was the procedure for collecting the contribution owed by the gambling organizers to combat the negative effects of gambling, which constitutes own revenues of the O.N.J.N. for the purpose of developing programs on combating the risk of addiction and the responsible organization of gambling.
Own revenues consist of the contributions of the licensed gambling organizers, with the following annual contributions:
– distance gambling organizers licensed in class I – Eur5,000 annually;
– legal entities directly involved in the field of traditional and distance gambling licensed in class II – Eur1,000 annually;
– distance games monopoly class III – Eur5,000 annually;
– licensed traditional gambling organizers – Eur1,000 annually.

This contribution, which was found in the same amount and in the old regulations, is due by the gambling organizers, according to art. 58 of the Ordinance, an activity financed entirely from public revenues that will be set up next to the National Office for Gambling. Contributions were paid retroactively, including for the period 2015-2018.
It is very important to point out that this contribution was included in the previous regulation, being provided for the organizers of gambling since 2015. For administrative reasons, the beneficiary of these contributions, the Fund for the prevention of gambling addiction, does not it was never set up, gambling organizers being the holders of an obligation that they could not concretely fulfill.
The manner in which it was decided to recover these contributions, which for a period of 3 years were in stand-by for reasons not attributable to the gambling organizers, is, in our view, harmful in a society where the normative acts must be predictable, and the proposed solutions, sustainable.
In order to collect these contributions, at the beginning of 2019, the gambling organizers were notified, by enforceable title, to pay the contributions in question, retroactively. They were notified and obliged to pay including gambling organizers who ended their activity between 2015-2018.
In addition, through the Order of the President of the ONJN, published in the Official Gazette 897 of November 6, 2019, the procedure for collecting accessories, interest and late penalties, regarding the payment obligations of the contribution, was established.
All these measures have been established as a result of a misunderstanding of the industry and, as a consequence of the erroneous assessment that the profitability of the gambling activity is above the national average for other economic activities.
Profitability, in figures, as it results even from the explanatory statement of the Ordinance 114/2018, has more quantitative connotations, comparative analysis between the gambling companies that record losses and those that record gains / which do not record neither profit nor loss not worrying about the need to make such a regulation necessary. The consequences, in this case, tend to produce effects contrary to the ones envisaged.
The feeling of legislative uncertainty holds the investments in place. The lack of legislative predictability, especially in the field of taxation, strikes hard in the economic activity, and the lack of fairness can in no case be justified neither by the shortcomings nor the preconceptions that exist in relation to certain economic activities regulated by the law.
As long as the effects of GEO 114/2018 on the establishment of
measures in the field of public investments and fiscal measures – budgeting, the modification and completion of normative acts and the extension of certain terms continue to occur and affect the business environment in the field of gambling and at the same time, given the unfairness of the measures analyzed, we believe that a reconsideration of these measures is good.