By Lucian Barbu Tax Partner, Tax Advisory Services NNDKP
Mihai Șerbu Assistant Tax Manager, Tax Advisory Services NNDKP
The National Gambling Office has issued, through Order no. 179/2018, new templates for the monthly statements for the income realised by gambling operators. Published on 5 September 2018 (thus only a few days before the deadline for submission of the monthly statements due for August), and without any reference of the starting date for the use of such new forms, the Order seemed to bring uncertainty at the level of the operators.
Luckly (sic!), the Office quickly returned and posted a note on their website informing that the statements were to be submitted in the new format only starting October 2018, so the operators were relatively relieved to learn that they had a whole month to adapt their systems and reporting streams for the new form.
After submitting the August statement, on the old model, the operators waved their sleeves and begun interpreting the requirements of the new model statement. Why interpret? Because besides the fact that from now on there will be reported a number of indicators that were not found in the old statement (and which the NGO wants operators to report in a “paper” statement in addition to the electronic reports from the systems at which it has access), even some of the information that was already found in the old template, but in a form that left room for interpretation over time, was restructured. Still, questions remain…
Thus, an unclear topic on which we will stop is the way bonuses are reported, especially in the case of bonuses granted and for which there are certain wagering conditions (for example, the player must bet 3 times the bonus amount before he can withdraw any winnings obtained from playing the bonus).
According to the new monthly statement template, the operator’s income includes the „participation tax under the form of bonus used from the bonus granted”. At the same time, the “prizes granted following the use of the bonus” are included as deductible when calculating the taxable base for the authorization tax. To put things in context, we reiterate two legal provisions of GEO 77/2009 on the organization and operation of gambling, and the related norms, which we believe should be taken into account for the interpretation of the subsequent legislation, such as Order 179/2018, respectively :
(i) in accordance with art. 8 of GEO 77/2009, the winning or the prize means the money, goods or services awarded by the operator to the winning game participant in accordance with the provisions of the gambling regulation; and
(ii) in accordance with art. 7, par. (5) of the Methodological Norms for the implementation of GEO no. 77/2009, the bonuses are introduced as they are used, in the operator’s gambling revenue and assimilated to the participation tax.
By corroborating the denominations of bonus sections in the monthly statement template with the above mentioned legal provisions, in the case of bonuses for which wagering requirements are imposed, it can be interpreted that only the initial bonus should be included in the operator’s income as it is played, while any subsequent amounts from winnings earned prior to meeting the wagering requirements should not be included as income; at the same time, it can be interpreted that the deductions representing prizes should include only the amounts that the player can actually withdraw, that is, those earnings in “real money” which the player has the right to withdraw after the bonus wagering requirements have been fulfilled. On the other hand, in the absence of any clarification or instructions to make a clear statement for the monthly statement, it remains … just an interpretation.
Given that the treatment of bonuses can significantly influence the level of the authorization tax, it would deserve a wider explanation in the Order on the monthly statement templates, possibly with examples (perhaps in a future regulation). At this point, however, we hope in a unitary interpretation of how bonuses should be treated by both those who need to prepare and submit the monthly statement, as well as those who should check it’s correctness.