The online environment still is a challenge for the Romanian tax legislation: Case study on income from gambling

By Alexandru Manucu, Tax Manager of Țuca Zbârcea & Asociații Tax

 

Starting March 23rd, 2018, for revenues earned by individuals from online gambling activities, the tax due is computed and withheld for each transfer from the gambling platform account into the bank or similar account. Consequently, the obligation to compute, withhold, report and pay the tax is allocated to the organisers and must be met by the 25th of the month following the month in which withdrawals are made.

Romania is an active environment where individuals of all ages and social backgrounds have an increased appetite for technology and everything that’s new. Whether we are talking about the IT sector, which gains an increasing share of GDP year-to-year, or if we refer to electronic cigarettes or to the blockchain technology that revived the mining-spirit in cryptocurrency “seeker”, Romanians are among the early-adopters. Going forward, professions / activities which have lost their shine make no exception and once they are moved online, they seduce more and more interested individuals. As previously highlighted, this trend also engulfed the gambling.

The legislator’s willingness to understand these new fields of interest and its objective to keep up with this trend, by providing the framework for the authorisation, deployment and taxation of these types of activities is nothing short of gratifying. Of course, the fast pace in which the online industry is developing creates difficulties in the application of unitary taxation mechanisms, and the need to adapt them to the specificities of revenue-generating activities is obvious. Perhaps even more important is the identification of non-functioning models and their improvement. Once again, the most eloquent example I can think of is that of online gambling revenue.

New rules regarding the Taxation Methods for Gambling Income

Although the gambling income tax regime is clear, the compliance obligations allocated to both organisers and players have been until recently somewhat disproportionate. Both parties were responsible for preparing detailed annual statements, addressing each individual withdrawal from the gaming account to their personal bank account. Subsequently, the Tax Authorities involved resources for processing the statements submitted by the players, for issuing the related tax decisions and, at least in theory, for the cross-checking between all players’ statements and the informative statements submitted by the organisers.

Thereby, given that all three parties involved – the state, the online gambling operators and the participants – were losing time and resources to ensure the payment of undisputed tax charges unequivocally considered to be fair, the issue of adjusting the taxation mechanism has been raised.

The solution? In line with the previous assertions and other opinions expressed by industry stakeholders, the obvious answer was the introduction of certain rules concerning the withholding of personal income tax due, implemented through the Emergency Ordinance No. 18/2018 regarding the adoption of fiscal-budgetary measures (“GEO 18”). Practically, it was intended to standardise the taxation mechanism for all gambling income earned by Romanian residents, according to the model of those obtained offline, by obliging gambling organizers to withhold the tax due from the revenues obtained by game participants (including those obtained at poker festivals).

Of course, the personal income tax remains an obligation for the participants, but the amounts actually received by them after the enforcement of GEO 18 are net amounts, the related tax being already withheld and subsequently transferred to the state budget by the operators. I believe that this notion will be easily absorbed at the level of the income beneficiary, as long as the relationship with the tax authorities is completely relocated to the organisers.

However, the latter do not escape the fulfillment of the existing informative / declarative obligations, and additionally, they must set up internal systems to ensure automatic compliance with this simplified fiscal framework for each withdrawal made by the participants.

Potential problems generated by the adopted measures

Without disregarding the opportunity of adopting such a measure, the timing of its implementation is at least uninspired, and it can generate a number of practical problems in the transition year – 2018. Although it was pointed out that the inconveniences regarding the need for transitional measures would be easily avoided if the legislator were to follow the implementation of these measures at the beginning of a tax period, such signals, including those from online operators, were ignored.

Therefore, they are currently facing a situation where they do not have the necessary IT systems to withhold the corresponding tax on withdrawals made by players from accounts opened on online gaming platforms. Given that the new provisions entered into force with the publication of GEO 18 the Official Gazette (i.e. March 23, 2018), with no time to allow the gaming platform to adapt to the new tax obligations, there have been and still are in practice situations where the income is transferred to the players’ bank account without withholding the tax.

With the clear intention of avoiding any damage to the state budget, the emergency solution identified by most online gambling operators is to bear from their own funds the tax for which they do not currently have technical computing and automatic withholding capabilities. In this context, the only fair method for both the state and the players is to calculate the tax due by the gross up method.

Conclusions

There is no doubt about the opportunity of adopting the measure whereby the obligation to calculate, declare and pay for gambling revenue deployed on online platforms is transferred to the operators. As I mentioned earlier, the timing for its entry into force is not proper. To conclude, the online gambling organisers were dealt a handful of aces, but the cards on the table stack the odds against them. We now have to see who will adapt their game sooner.

(Română) MASA ROTUNDA PRIVIND PROBLEMELE ACTUALE DIN GAMBLINGUL ROMANESC A AVUT SUCCESUL ASTEPTAT

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Casino Technology adds new functionalities to its Casino management system for increased results

Developed for key gaming floor management, Casino Technology’s RHINO Casino Management System is now enriched with even more functionalities to diversify and increase your bottom line. The promotion opportunities are enhanced with more options by the newly added Happy Hour and the Money Back promotions.

Giving additional rewards in specific period of time, the Happy Hour promotion is an extra tool for the casino managers to keep the clients interest, thus ensuring they will spend more time on the device for better results. Requiring a certain bet in a fixed period of time, the Happy Hour is an excellent way to reward and get the best out of the players stay in the location.

Valentina Dobre, Regional Director for Romania at Casino Technology commented: “The new functionality of RHINO™ is a powerful instrument to increase the motivation for more play, more often visit at the location and attract new clients, making it a prerequisite for higher revenue”.

The Promotion Module of the system is further enhanced with the Money Back promotion that provides an option for crafting a priorly set bonus, based on a certain percentage of the clients lost amounts in previous periods. Considered as a bet without fear opportunity, the new functionality is amongst the best options the operators could offer to their clients, encouraging customers to play the game with a notion of reduced risk. For even more interaction with the clients, the promotion is supporting SMS notification.

Striving to ease and better securing the operational process on the floor, Casino Technology added a Bill Clearance functionality to the Accounting Module of the RHINO™ Casino Management System and thus providing information about the actual bill stacker status and the amount of money inside the slot machine. The bill count is precise, as all operations such as current bills in the slot machines, comparison of the manually added amounts with the amounts that are reported automatically as well as the manually added bills are supported by a report, send to the Accounting Module where it is visible and easy to track.

Radka Alekova, Business Development CMS at Casino Technology said: “As RHINO™ was created to enable the easy real-time decision making on casino floor issues, we are constantly improving its functionalities to simplify the dynamic environment into an easy interpretable data. We provide the needed tools that are vital for the management and for getting even better results in the locations”.

The new functionalities of RHINO are the next leap in excelling the Casino Technology`s BIG 5 suite of systems that includes too online gaming platform, universal jackpot server, money management system and remote game server. Just recently the Remote Game Server ELEPHANT™, has been certified on the Romanian market to offer HTML5 games in a mobile version with convenient and user friendly interface as well as in desktop version. Already through ELEPHANT™ are available 100+ HTML5 games and has been integrated with dozens of online platforms and aggregators, offering a convenient tool for distribution of genuine and another party game content to all existing gaming channels. The operators could take advantage of the already available integration with various platforms around the world. ELEPHANT™ enables operators to deliver a customized player experience that is dynamically in compliance with the changing market requirements and regulations.

Through the Remote Game Server of Casino Technology the games could be launched on the social networks.

 

About Casino Technology: Casino Technology was founded in 1999. The company is a gaming equipment manufacturer with established positions in international markets and products compliant in more than 50 gaming jurisdictions.

Casino Technology is renowned for the rich portfolio of quality games, contemporary technological solutions and products made with inspiration for  satisfied players around the world.

For more information – casino-technology.com

GAME WORLD CONSTANTA THE LARGEST GAMBLING HALL ON THE ROMANIAN SEASHORE

Awarded last year as “The Best Gambling Hall Opened in 2017”, Game World City Park Mall Constanta has fully confirmed the opinion of those who voted it before the annual gala organized by the Casino Inside magazine.

 

And because the summer season has begun and the capital of entertainment is moving to the seaside, it means that for Game World Constanta – the largest gambling hall on the Romanian seashore – this period of summer has special features. First evidence to the fact that everything is prepared for having even more fun at Game World Constanta, is the new calendar of promotions and events.

 

Thereby, every day of the week offers at least one special attraction, both to the local guests and the ones who just transit Constanta or are spending their vacation on the seaside. Whether is about live music parties, live shows and dance, culinary specialties from the free buffet available to all Game World customers, or the numerous prizes that can be won at any of the five ongoing promotions, it is sure that everybody choosing to having fun at Game World Constanta will find something that matches  their preferences.

 

The themed parties – from the 3rd Friday of every month – have become a reference point in Constanta`s entertainment calendar, the only question being related to the topic of the next party which is always a pleasant and charming surprise!

 

The elegant and modern environment of the gambling hall, the diversity of the 157 slot machines and electronic roulettes and the mix of the 19 Jackpots that can be won at any moment of time, are another 3 reasons for the customers` satisfaction. The betting offer is completed by the Stanleybet sports betting area – ready to welcome all of those who want to watch the major sport events such as Roland Garros and Wimbledon tennis tournaments and the 2018 Football World Cup.

 

Consistent to the company values, Game World Constanta actively supports the Responsible Gambling Program both through the multiple ads and communication materials and through all the talks that managers and employees have with the customers interested in the program. Moreover, customers have on their disposal a modern info point situated inside the gambling hall, permanently connected to the Responsible Gambling Program website: www.jocresponsabil.ro

 

And for a break between gambling sessions or a nice chat with friends, for watching football games or just enjoying a coffee, there is no better place than the specially designed Game World terrace, with access both from the gambling hall and directly from the parking place – using the elevator reserved for Game World customers.

From this terrace, situated on the 1st floor of City Park Mall, one can admire the delightful view of the city over the Tabacaria Lake as well as the sun rising from the sea at the first hour in the morning.

The summer is here! The season of holidays and big parties have begun! Game World Constanta – the largest gambling hall on the Romanian seashore – launches an invitation to fun and entertainment!

(Română) 10 ponturi pentru o excursie reușită în Rusia la Cupa Mondială de Fotbal 2018 și 10 pariuri la care nu te-ai gândit

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Sebastian Ionescu, president of the ONJN: “Communication is very important to me”

 “Sebastian Ionescu: The decisions I shall make shall be discussed with all those involved, we wish to have an open, transparent and fair market”

 

After the changes which have taken place lately with regards to the leadership of the National Office for Gambling (ONJN), we considered it be opportune that we offer the new ONJN leadership the privilege to present itself, through the voice of the its new president, Mister Sebastian Ionescu.

MR. Sebastian Ionescu if you please, give us a brief presentation of your professional experience.

I am a computer scientist, I graduated from the Faculty of Cybernetics, but I have permanently perfected myself within this field, as technological knowledge must be updated permanently. I have two Master’s degrees, one from the Technical Military Academy, specialized in Information Technology Security, at the Computer Faculty and the second from the Police Academy, in the Management of Fraud Investigation. Currently, I am a doctoral student at the Police Academy, in the field of public order and national security, as I considered that I can continue, in an applied manner, a technical scientific research paper in the field of gambling. The knowledge I have gained in time, as well as those gained as a result of the Master’s programs have truly helped me with regards to the input brought to the team which has actively worked upon the legislative amendments within the field of on-line and land-based gambling. Concurrently, I relied upon my previously gained experience within my current activity in the ONJN, where I arrived in February 2014, and in 2015 I became the general director of the Directorate for Monitoring and Computerization. In the on-line field, we have succeeded in having one of the best European legislations, we have respected all the international criteria, we have also had many meetings with European correspondents, then with Romania’s internet providers, as to insure that the principles are fair and applicable. For example, at one point in time, there was an appeal at the RCC (Romanian Constitutional Court), regarding the message to block the access of a unlicensed site on Romania’s territory and we proved that it is not a violation of any right, but a warning with regards to a possible contravention. Concurrently, the studies conducted by the Military Academy have been of real help in correctly establishing the methods of secure reporting, as well as aspects regarding electronic signature. I hope that, in the near future, these amendments may be used in administration, in the ONJN’s computer system, so that we are able to reduce the bureaucracy, especially by using electronic format reporting.

You have been working at the ONJN ever since its foundation, coming from the private sector. How was this transition from the entrepreneurial area to the state area?

It was a challenge from the start, then it was a great reward as the input to the amendment of legislation paid off, the on-line system is functional. For 14 years I had an IT consultancy company, but before trying to start my own business, I worked in this field since I was a student, as an analyst-programmer aid, and after I graduated, as a computer science programmer, in 2000 occupying the leadership position of the calculation center in an important factory in Bucharest. Even though I was already familiar with working for the state, I had to adapt to certain new work procedures. The Office is not a bureaucratic institution, but when working for the state, you must respect certain circuits for documents, a legislative framework which can be interpreted from the outside as “a lot of paperwork”. If we are speaking about these administrative, bureaucratic aspects, the transition to the state is, surely, a great change for any person.

If you are speaking from a professional point of view, I have met very valuable individuals in this field, both within our institution, and within the private companies and associations. Communication is very important to me, as well, therefore the decisions I shall make shall be discussed with all those involved, there shall be meeting within the Advisory Council, we wish to have an open, transparent and fair market.

Which were the reasons for changing the former leadership and appointing you as President?

Mister Dan Iliovici was dismissed from his position by decision of Romania’s prime-minister, the reasons are not detailed. I, in turn, have been appointed by decision of the prime-minister.

A part of the gambling operators in out industry perceive these changes in the ONJN’s leadership with a certain “fear”. Do these operators have any reasons to worry as of your appointment to the head of the institution?

I don’t believe it’s fear, on the contrary, I believe that they are actually delighted as at the head of the ONJN now stands a person who has trained in this field, permanently perfected himself and who knows the industry’s issues. I promise that all discussions shall be constructive, and I wish to clarify with them all aspects which are unclear.

With regards to the expectations that the operators have with regards to the ONJN leadership, firstly, the discussions within the Advisory Council shall focus on concrete issues on the market, which we wish to centralize and prioritize, so that we can take the necessary measures as to render activities efficient. As I have underlined during the first Council session, which was held on May 24th, we expect all proposals from operators with regards to unclear aspects or identified issues. All shall be conducted in a transparent manner.

One of the main questions on the lips of every operator in the industry refers to increasing taxes and fees applied to gambling. Is there such a “threat” for operators?

Operators pay at the ONJN only the taxes specific to the field, the taxes due to the state by the companies are paid at the fiscal administrations, in accordance with the Tax Code. Taxation at the source, recently approved through GEO no. 18/2018, emergency ordinance issued by the Executive, is an important step in this field – primarily, the player is rid of the worry of keeping a record of the winnings, of calculating and declaring fiscal obligations, following all bureaucratic procedures involving this aspect. These obligations are now the responsibility of the companies, which shall declare and pay these taxes in a unit manner, not broken down, for each player, therefore, a win for the companies as well. Actually, we could say that we have three winners here – the player, the economic operator, and also the state, which shall collect the associated taxes in a centralized manner.

Can the ONJN’s activity be improved? What measures do you wish to take in the following period as to improve this activity?

With regards to the Office’s activity, we are not speaking about any legislative change, surely, but only administrative changes – we want a better relationship with the players, with the persons who refer to us with various issues, regardless if it is on-line or land-based, we wish to have less bureaucracy and more transparency. Therefore, we do not intend to make major amendments to the legislation, we do wish, however, to have a unit interpretation of certain aspects which need clarifying at the present time.

With regards to economic operators, we wish to have more punctual discussions on the problematic in the field, discussions we wish to finalize in measures which shall reflect both the improvement of our activity and the clarifications in the activities carried out by organizers. We are an example in the European legislations in the field, everything is functional, but we shouldn’t forget that the technological evolution is generally ahead of the legislative amendments and because of this, small adjustments are needed. In conclusion, in order to streamline all activities, we believe that there are certain aspects which need to be analyzed and clarified.

Please send a message, by means of our magazine, to Romania’s gambling operators.

We intend to be an open institution, both to the citizen and to the organizers, to answer all your questions in the shortest amount of time possible. My message to the economic operators is to communicate, discuss and find, together, the best solutions, to eliminate different interpretations on the same matter and to have a unit understanding of the law.

(Română) 5 sugestii de pariuri antepost pentru Cupa Mondială Rusia 2018

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POKERFEST MAMAIA

 

In the ever so diverse world of gambling, there is a field very different from the rest of the games, with special rules and principles and a completely different pull on the public. That is poker, the only game which isn’t played against the house, the game which allows organizing exciting competitions, with professional poker players and fans, with trophies and a fascinating history. And we have took it upon ourselves to allocate a special column in which we shall periodically discuss the most important current events in Romanian poker.

 

We inaugurate this series of informative articles with a scan of the most important events in which you might consider participating in the following period.

 

Beyond the permanent schedule of the poker clubs in the country’s important cities, the attention of this game’s fans is drawn to the Romanian seaside, Mamaia to be more exact, where, very soon, two large festivals shall take place covering together the entire spectrum of preferences of all poker players: The “888Live Mamaia” and “Caelia Beach Vip Player Tournament”. Here is a short description of both, in chronological order.

 

888Live Mamaia

 

This is a festival within the 888Live series which is held throughout the year in various locations across the country, as a result of an alliance between the on-line giant 888poker and PokerFest Romania, and the phase in Mamaia, held between 18 and 24 July, is special for several reasons.

 

First of all, the guaranteed prizes are tempting for anyone. A total of at least EUR 230,000 is allocated for the prize funds. The main tournament – Main Event – shall cost EUR 550 and has EUR 100,000 guaranteed. Between the 22 tournaments of the series, we observe the High Roller of EUR 1,100 with EUR 30,000 guaranteed, the Opening Event with EUR 20,000 in prizes with a buy-in of only EUR 170, and other tournaments in different formats and buy-ins, so that any pocket may have access to the tables.

 

Secondly, a great plus for the event is its location. The festival shall take place only several meters away from the sea’s waves, in the 4 star Bavaria Blu hotel, in a generous hall, whose terrace offers a perfect season view.

 

Last, but not least, the advantage of the alliance between the Romanian PokerFest operator and the on-line poker room 888poker is in favor of small-budget players: starting with May 24th, an intense qualifications campaign is taking place on-line with satellites starting from only 10 cents and a final super-satellite, which plays every two days, as a result of which the EUR 550 ticket may be achieved with only a $55 buy-in.

 

Caelia Beach Vip Player Tournament

 

This is a complete premiere event, as it is a tournament destined to promote poker among influent persons, an exclusive meeting, with limited seats. The tournament shall take place between 16 and 19 July in the most luxurious tourist complex in the country, Caelia Beach Bar & Lounge, the favorite meeting and relaxation place of the most select names in show-biz, sports, business and mass-media.

 

With an entry fee of EUR 1,100, the tournament is limited to 100 players and shall reunite in-house celebrities and elite poker players around the poker tables. The organizer is PokerFest Romania, and we find out from CEO Sorin Constantinescu that: “The purpose of this exclusive event is to introduce poker to influencers, to show them that socializing is at its highest around a poker table, that relations, friendships and even business and collaborations can arise around a poker table.”

 

If you decide to participate, after finding out more from the organizer’s web-page, we advise that you pre-apply, as 12 hours after the official announcement was made, 10% of the available seats were already covered.

 

In the future number of our magazine, we will provide details about the following events in the Romanian Calendar of the 2018 season of live-poker.

 

(Română) Cupa Mondială din Rusia 2018 – ghid complet

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