The practice of gambling in 2024
Joint venture for gambling activity
Article from the series “Gambling Practice“, by Anchidim Zăgrean, FedBet Vice President and President of ROMBET
As a result of the novelties brought, in the special regulation of gambling in Romania, through the adoption of Emergency Ordinance no. 82 of 2023, by which it is allowed, as an exception to the special rule of their direct exploitation, it being established that “the exploitation of gambling can be carried out, jointly, by 2 or more organizers of gambling, each licensed according to the law, or legal entities under common control with gambling organizers licensed according to the law, between which there is a contract concluded under the terms of the law, the liability falling to the contracting parties”, in practice two situations can be identified, both for reasons of fiscal nature:
1. Joint venture, for the purpose of jointly exploiting games of chance, only with holders of 1st class gambling licenses or with legal entities under joint control with licensed organizers of games of chance;
2. Partnership in participation, in order to own in use the authorized means of play, with the license holders of the 2nd class.
The joint venture agreement, according to the legal provisions, includes mandatory elements and then conventional clauses, between the parties, with specific provisions on the way of organizing and operating the gambling activity.
A) Mandatory elements, which must be taken into account when concluding the joint venture agreement, in gambling activity, presented in a synthetic form, would be:
a) Establishing and clearly describing the operations, which they will jointly undertake, as well as specifying the fact that one or more persons are granted a share in the benefits or losses realized from these operations;
b) This type of joint venture contract can only be proven by a written document;
c) Joint venture cannot acquire legal personality and does not constitute, in relation to third parties, a person distinct from the person of the associates;
d) The third party has no right against the association and is only obligated to the associate with whom he contracted;
e) Associates exercise all rights arising from the contracts concluded, by any of them, but the third party is held exclusively to the associate with whom he contracted, unless the latter declared his capacity at the time of concluding the act;
f) Any clause, from the association contract, which limits the liability of the associates towards third parties is non-enforceable to them;
g) Any clause that establishes a guaranteed minimum level of benefits, for one or some of the associates, is considered unwritten.
B) Conventional clauses, in the joint venture agreement, they may include:
a) The agreement of the parties that will determine: the form of the contract; the extent and conditions of the association; the causes of its dissolution and liquidation;
b) Associates remain the owners of the goods made available to the association, but they can agree that the goods brought to the association, as well as those obtained as a result of their use, become joint property;
c) The goods made available to the association may become, in whole or in part, the property of one of the associates for the achievement of the object of the association, under the conditions agreed by the contract and in compliance with the publicity formalities provided for by law;
d) Associates can stipulate the reacquisition in kind of the goods upon the termination of the association;
e) Associates, even acting on the account of the association, contract and engage in their own name towards third parties but are held jointly and severally by the documents concluded by any of them.
In order to organize and manage the accounting as well as to apply the appropriate tax treatment, those who have been appointed to manage the joint venture, must take into account the fact that:
a) Joint ventures do not give rise to a separate taxable person;
b) In an association, between two or more Romanian legal entities, recorded income and expenses are attributed to each partner, according to the provisions of the association contract;
c) Income and expenses, determined by the operations of the association, transmitted on a statement basis to each partner, according to the applicable accounting regulations, are taken into account for determining the taxable profit of each partner;
d) The supporting documents related to the operations of the association are those that were the basis of the registration in the accounting records, by the person designated by the associates, according to the provisions of the association contract;
e) The company that manages the record of the joint venture keeps the record and draws up verification balances distinct from those corresponding to its own activity;
f) The tangible and intangible fixed assets, made available to the association, are included in the accounting records of the person who owns them;
g) Expenses and revenues determined by the operations of joint ventures are accounted for separately by one of the associates, according to the provisions of the association contract;
h) At the end of the reporting period, the expenses and revenues recorded in kind are sent on a statement basis to each associate, in order to record them in their own accounting;
i) At the balance sheet date, the goods of the nature of stocks, receivables, availability, as well as the debts of the joint venture association, are entered in the annual financial statements of the associate who keeps the records of the association.
“Statement for joint venture operations” is the supporting document, which is used in all fields of activity, in which joint venture operations are carried out, on the basis of which the expenses and revenues realized from joint venture operations, as well as the amounts to be transferred, are settled between associates.
The statement is drawn up by the entity that keeps the joint venture accounting, monthly or at the terms stipulated in the contract, for each partner, with the income and expenses attributable to him, for registration in his own accounting, according to the quotas stipulated in the concluded association contracts. Expenses and income will be grouped on accounts from the classes of expense and income accounts, according to the applicable chart of accounts.
Other transfers are also entered in the account, representing the value of the money, the realized profit, the depreciation of the fixed assets and other amounts resulting from the joint venture operations.
The accounting record of settlements from joint venture operations, for the activity of joint venture associations, is kept with the help of account 458 “Settlements from joint venture operations”, based on the settlement of expenses and revenues realized from joint venture operations, as well as the amounts transferred between co-participants.
Account 458 “Settlements from joint venture operations” is a bifunctional account;
1. In the credit of account 458 “Settlements from joint venture operations” the following is recorded:
– the revenues realized from joint venture operations transferred to co-participants, according to the association contract (701 to 781);
– expenses received by transfer from joint venture operations, including depreciation calculated by the owner of the fixed asset (601 to 681);
– the amounts received from co-participants (512, 531).
2. In the debit of account 458 “Settlements from joint venture operations” the following is recorded:
– revenues received by transfer from joint venture operations (701 to 781);
– the expenses transferred from joint venture operations, including the depreciation calculated by the owner of the fixed asset, which is transmitted to the co-participant who keeps records of the joint venture operations according to the contracts (601 to 681);
– sums paid to co-participants or transferred as a result of operations in the participation (512, 531).
3. The credit balance of the account represents the amounts owed to the co-participants as a favorable result (profit) from joint venture operations, as well as the amounts owed by co-participants to cover any losses recorded from joint venture operations.
4. The debit balance of the account represents the amounts to be collected from co-participants to cover possible losses recorded from joint venture operations, as well as the amounts to be collected by co-participants from joint venture operations as a favorable result (profit).
We’ll be back with other opinions in the next issue of the magazine…
