The practice of gambling in 2022
The state’s bets – having as stake the survival of Romanian gambling organizers – as a result of the latest legislative changes
In the middle of 2022, all actors in the Romanian economy were forced to participate or follow the economic debates or analyses, public or private, in an attempt to discern, as quickly as possible, the organizational, administrative or social consequences, but above all to calculate the unwanted effects on the profitability or profitability of one’s own activity, as a result of the entry into force, from July 2022 and until January 1, 2023, of the much-discussed legislative amendments, regarding “the resettlement and optimization of the Romanian tax system”, to determine the influences of these amendments on the level of taxation and taxation of one’s own activity, the new way of reclassifying, from a fiscal point of view, some economic activities.
These resettlement or fiscal harmonizations (which are in fact nothing more than substantial increases in taxes and duties, removed from the job of politicians) could not avoid the activity of gambling organizers, to whom G.O. 15 of 2022, which is why, in the following, we will try to summarize some of these fiscal aberrations, with consequences that are difficult to anticipate, on the business environment in this field.
I. Changes regarding the organization and operation of gambling, imposed by the adoption of Government Ordinance no. 15 of 2022:
1. All annual license fees have been increased, starting from July 18, 2022, the highest level of increase being 400% for traditional fixed-odds betting, followed by the increase in annual license fees for traditional slot-machine gambling of 375%, as well as the increase in the annual license fee for activities online, by 144%;
2. All annual authorization fees have been increased, starting from July 18, 2022, the highest level of increase being 144% for online gambling activity, followed by a 128% increase in annual fees for slot-machine activity, traditional games;
3. The vice tax was increased by 125%, this fee to be paid in advance and in equal installments from 18 July 2022, regardless of whether or not the game is in operation (these devices implicitly become a vice just by their acquisition and existence);
4. Administrative fees were generalized for all types of gambling, for additional encashments, in the form of: 1) documentation analysis fee: a) online games – 3,000 euros and b) traditional games – 500 euros; 2) license issuance fee – both types of games – 9,500 euros; 3) fee for analysis of gambling authorization request documentation – 150 euros; documentation analysis fee, request to integrate new games or re-certify games on the remote gambling platform – 150 euros;
5. A so-called “promotion tax” was introduced of gambling activities, representing 5% of the value of advertising contracts, a new “harmonization” but also an absolutely original Romanian fiscal invention;
6. The payment terms have been changed, for the contributions established to promote compliance with the principles and measures regarding socially responsible gambling, respectively for the first year of the license, within 10 days from the date of approval of the documentation, and for the following years, until January 25 of each year;
7. The Romanian state provided, through this G. O. 15 of 2022, the fact that in the event of the termination of the validity of the license, for any reason, for the license year in which the factual situation occurs and which has the effect of the termination of its validity, the annual contribution is due in full, as well as the fact that “in the event that a gambling organizer wishes to cease the activity, before the expiration of the validity of the organization license and the exploitation authorizations issued in his favor, he has the obligation to notify O.N.J.N. in this sense and at the same time to pay the remaining payment difference from the fees related to the development of gambling activities”. I presume that those who proposed, as well as those who approved these provisions, were rather inspired by the Phanariot period, a period in which the “gifts” had to be paid in full even if the harvests were naturally compromised, the “subjects” being obliged, through various methods, to pay the tithe for the master. These rules have nothing to look for in a modern and democratic world, and investors, in this field, must be treated similarly to all other investors, enjoy equal treatment and must not be discriminated against in any way, otherwise, all these democratic principles and rules will be nothing more than notions, which we pledged to respect, once we joined the EU, but which, in fact, are totally ignored or violated, by adopting some absolute regulations “originals”;
8. Also, through the amendments made to the special gambling regulations, from July 18, 2022, the contraventions, provided by these regulations, exclude the application of the warning as well as the fact that the applied fine can be paid, within no more than 15 days from on the date of handing over or communicating the minutes, at half of the minimum fine provided by the normative act and the ascertaining agent must mention this possibility in the minutes. It is the same “equal” and “non-discriminatory” treatment, which I mentioned above, even if constitutionally it is mandatory to respect these fundamental rights and freedoms, for all representatives of the Romanian state, as they are provided in the “Charter of Fundamental Rights of the EU” as well as in the “Universal Declaration of Human Rights”.
II. Changes regarding the application of the Fiscal Code, brought by the adoption of Government Ordinance no. 16 of 2022:
1. The method of taxation of gambling participants’ income has been changed, starting from August 1, 2022, with taxation and then withholding at source, by applying a tax scale of 3%, 20% and 40%, with a 300% increase in the first level, a 125% increase in the second level of the grid and a 160% increase in the third level of the tax grid, simultaneously with the reduction of the maximum level for each level, respectively from 66,750 lei to 10,000 lei, for the first level, from 445,000 lei to 66,750 lei, for the second level, and then, with maximum taxation, of 40%, for what exceeds the amount of 66,750 lei;
2. It was decided to exclude Romanian legal entities, which carry out activities in the field of gambling, from the possibility of applying income tax, of the nature of micro-enterprises, starting from January 1, 2023;
3. It was decided to increase the tax on dividends, from 5% to 8%, starting from January 1, 2023, thus, the income in the form of dividends, including the gain obtained as a result of holding shares defined by the relevant legislation collective investment bodies are taxed at a rate of 8% of their sum, the tax being final. The obligation to calculate and withhold income tax in the form of dividends rests with legal entities, together with the payment of dividends representing the gain obtained as a result of holding participation titles by shareholders, associates or investors. The deadline for transferring the tax is up to and including the 25th of the month following the month in which the payment is made. In the case of dividends or profits obtained as a result of the holding of participation titles, distributed, but not paid to shareholders, associates or investors by the end of the year in which their distribution was approved, the dividend or profit tax is paid until the date of January 25 inclusive of the year following the distribution. The tax owed is transferred in full to the state budget.
We’ll be back with other opinions in the next issue of the magazine…