by Alina Tace, Head of IP & Gaming
and Mihai Șerbu, Tax Manager, Tax Advisory Services
The gambling industry, as we well
know, is an ever-
changing and expanding competitive arena in which both the gambling organizers and the suppliers of products/services holders of Class 2 licenses need to constantly adapt their offer to their consumers’ needs. Thus, faced with the challenges of technological progress and the boundaries imposed by the legislative framework, the industry continues to keep us engaged with its constant initiatives of (self)regulation of the sector, leaving no room for boredom.
Thus, if 2019 started with a series of legislative novelties of great interest for the gambling industry brought by the so-called “greed” Ordinance (GEO no. 114/2018), it ends with a series of new provisions that, in our opinion, are meant to fulfil and clarify some procedural aspects related to the annual contributions of economic operators who perform activities in the gambling field.
“Render unto Caesar the things that are Caesar’s!” Indeed, like many other highly regulated fields, the gambling sector has many features (not only technical but also inherent to the industry), which, in the absence of a transparent legal framework, cannot be correctly understood, hence the need to continuously adapt and add to the legislative picture, most often through infra-legislative acts issued by the regulatory authority, the National Office for Gambling (“NOG”).
This brings us to the subject of this article, namely an insight into Order no. 400/2019 issued by the President of NOG (hereinafter referred to as the “Order”) and published on November 6, 2019 in the Official Gazette of Romania – Part I – No. 897.
The Order focuses on the payment of contributions owed not only by the gambling organizers, but also by the suppliers holders of Class 2 licenses and intends to combat the negative effects of gambling. This contributions constitute own revenues from the activity established this year alongside the NOG for promoting the observance of the principles and measures regarding socially responsible gambling (hereinafter referred to as the “Annual Contribution”).
At the beginning of 2019, an uproar was created among the participants in the Romanian gambling industry, around an “apparent” new “tax” due by all economic operators who perform activities in the gambling field under a Romanian license. This took the form of an annual contribution for the financing of an activity attached to the NOG, to promote the observance of the principles and measures regarding socially responsible gambling. However, the “tax” in question is not new by any means, since it has provided in the legislation since 2015; it has only recently been enforced.
Essentially, the changes brought in 2015 to the main normative act in the field, GEO no. 77/2009 regarding gambling (hereinafter referred to as “GEO 77/2009”), were aiming to establish a public foundation in the form of a Fund for the prevention of gambling addiction, managed by NOG, to which all the licensed operators should have contributed. However, the foundation and the fund were never set up.
The fact that the foundation and fund were never established made it impossible to pay the contribution to all economic operators who perform activities in the gambling field.
Four years later, in 2019, GEO no. 114/2018 replaced the concept of foundation and fund with an activity attached to the NGO, solely financed from the Annual Contributions owed by licensed gambling operators.
Application of the Annual Contribution obligation
Starting in 2019, the procedure for collecting the Annual Contribution has been legislated, providing for a 30-day deadline for the issuance of debt / enforceable title by the NOG for all economic operators who performed gambling activities during 2015-2018. This procedure was the mechanism for notifying the obligation to retroactively pay the Annual Contributions for the entire period in which they have been active in Romania under a valid license.
Annual Contribution payment deadline, as per GEO 77/2009
The general rule provided by the main legislation in the field of gambling provides that the deadline applicable to the Annual Contribution is December 15 of each year. The deadline for the operators who obtained a license after this date is the date of issuance of said license.
In light of the above, in 2019, the practical approach taken by the NOG was that, for all operators licensed in 2019, notification of payments of the Annual Contribution for year 2019 were issued shortly after the NOG issued the decision for approving the license application.
Therefore, strictly for operators licensed in 2019 (but potentially applicable for all new licensees), considering that no exception is provided for the general payment term of the Annual Contribution (i.e. December 15 of the current year), one interpretation of the legislative text could suggest that another payment obligation exists on December 15, 2019; this time owed in advance, for the year 2020. Such interpretation may create an unjust discrepancy from the rest of the licensed operators who have obtained the license in preceding years, for whom December 15, 2019 is the due date for the settlement of the Annual Contribution owed for the current year (2019), as the single contribution payed for this year.
Annual Contribution payment deadline, as per Order 400/2019
Given the need for clarifications, especially considering that the licensing year of economic operators regarding the conduct of gambling activities does not coincide with the calendar year, and also, in the idea of implementing a unitary direction regarding the future approach in relation to the payment deadline of the discussed contributions, Order 400/2019 provides the following payment terms applicable to the Annual Contribution:
- for the first year of validity of the license, the payment term is set up to the 25th of the month following the one in which the documentation was approved;
- for 2019, exclusively for licenses whose validity is limited to the period 2019-2020, the due date is December 15, 2019;
iii. starting with 2020, at least with 10 days before the expiration of the previous license year;
- for the following license years, with a minimum of 10 days before the expiration of the previous license year.
Thus, although we consider that the publication of the Order is auspicious, as it supports certain practical situations that arose especially due to the fact that the validity of the licenses issued in favor of the economic operators does not coincide with the calendar year, and also facilitates a streamlining of the settlement of the fiscal-budgetary obligations due by the licensed economic operators; there are, however, some aspects that could still leave room for interpretation (for example the applicability of the point “ii” above).
Contradictory provisions between normative acts
From a legal perspective, with respect to the payment term of the Annual Contributions, Order 400/2019 contains provisions that contradict the main and hierarchically superior normative act GEO no. 77/2009 which establishes a new payment term for these contributions. For example, if GEO no. 77/2009 that the payment deadline for these contributions is “December 15 of each year, and that the payment term for the operators who have obtained a license after this date shall be at the time when the license was obtained”, Order 400/2019 provides that, starting with 2020, the respective contributions will be paid at the same time “with the payment within the legal term of the license fee corresponding to the next license year, namely at least 10 days before the expiry of the previous license year”. Moreover, in order to resolve the contradictions mentioned above, the Order provides that, at the date of its entry into force, any other contrary provision is repealed”.
Since this sector is already highly developed (even in what concerns remote gambling, which has been liberalized since 2015), it is clear that the main ratio of the current regulatory activity in this field is not represented by the adoption of primary regulations, but by the amendment of the existing norms.
However, all the proposed amendments should respect the unitary character, clarity of the legal order, and legislative technique norms for drafting normative acts, with the clear and intent purpose that the proposed normative will be organically integrate into the system of already existing legislation (namely that the changes are able to integrate without inconsistencies in the existing basic legislation).
Simply put, a normative act can be modified only by another normative act of the same value and with the same legal force, so that a normative act of inferior value can neither modify a normative act of a higher value nor contain contradictory provisions to the latter.
As mentioned above, the normative acts adopted by the central public administration, which include Order analyzed in this article, are subordinate to all the other normative acts, which means that the legal provisions contained by such must comply with the legal norms contained in the superior normative acts. It is in the best interest of the sector to be intelligently and effectively regulated, so that any clarifying legislative initiative is more than welcome, but such should firstly be based on the clarity and uniformity of the norms, since an unclear norm will never succeed in reaching its goal, but will only cause arbitrary and, implicitly, non-unitary behaviors. In spite of the above, most of the time, following the legislative process accordingly is rather difficult and, if political instability is added, it can be prolonged for quite a long time, which would even defy the rationale of the legislative initiative itself (that of bringing and implementing the necessary clarifications in this field as soon as possible).
In light of the above, Order 400/2019 can be viewed as NOG’s attempt to clarify the procedure and payment terms for the annual contributions and facilitate the annual payment of legal fees owed by economic operators by establishing a single applicable deadline (the same for the payment of license fees, as well as for the payment of annual contributions). This is a clear indication that, in the eyes of the authority, the procedure established by this Order is the one expected to be enforced , but it still remains to be seen how this will be practically implemented.