by Anchidim Zăgrean, Rombet vice-president
Given the fact that the special regulation of gambling in Romania allows for the common exploitation of gambling, between an organizer and one or several economic operators or natural persons, in the article below, we present to you the most common case: joint venture.
This type of contract, concluded under the law, represents the most practical form of gambling exploitation according to legal provisions, it comprises the mandatory elements and conventional clauses between the parties, as follows:
- granting one or several persons a share of the benefits and losses of one or several operation of one or several operations which are undertaken;
- the contract is proved only through documents;
- the title of legal entity cannot be gained and does not constitute a distinct person from the entity of the associates in relation to third parties;
- the third party has no right of joint venture and has no other commitment than that toward the one with whom it has contracted;
- the associates shall remain the owners of the goods made available to the joint venture;
- they can convene upon the fact that the goods brought into the joint venture, as well as those obtained as a result of their use, may become common property;
- the goods made available to the joint venture may be transferred, entirely or in part, under the ownership of one of the associated as to achieve the objective of the joint venture, under the conditions convened upon under the contract and by respecting the publicity formalities provided by law;
- the associates may also stipulate regaining the goods in kind upon the termination of the joint venture;
- the associates, even acting on the grounds of this joint venture, contract and employ in their own name in relation to third parties, however, they are held individually by the documents concluded by each of them;
- the associates exercise all the rights deriving from the contracts concluded by any of them, and the third party is held exclusively in relation to the associate with whom it contracted, with the exception of the case in which, the latter has declared its quality upon the conclusion of the document;
- any clause within the joint venture agreement which limits the associates’ liability in relation to the third parties shall be unenforceable to them;
- any clause which establishes a minimum guaranteed level of benefits for one or several of the associates is considered unwritten;
- the parties’ agreement determines the form of the contract, the extension and conditions of the joint venture, as well as the cause for dissolution and liquidation of said joint venture.
In order to organize and manage the accounting, as well as for the application of the tax treatment adequate to joint ventures without legal entity, the following aspects must be taken into consideration:
- the joint ventures do not give way to a distinct taxable person;
- in a joint venture between two or several Romanian legal entities, the registered income and expenditure are attributed to each associate, in accordance with the joint venture contract;
- the income and expenditure, determined by the joint operations, are sent based to each associate based on an expense account, according to the applicable accounting regulations; these are taken into consideration as to determine the taxable profit of each associate;
- the substantiating documents associated to the joint operations are those which have stood as foundation for the registration into the accounting register by the person designated by the associates, in accordance with the provisions under the joint venture contract;
- the company that manages the joint venture’s register shall draft the trial balance distinct of that correspondent to its own activity;
- the tangible and intangible assets, made available to the joint venture shall be included in the accounting register of the one which owns them;
- the expenditure and income determined by the joint operations shall be taken into account in a distinct manner by one of the associated, in accordance with the provisions under the joint venture contract;
- at the end of the reporting period, the expenditure and income registered based on nature shall be sent to each associate by means of an expenses account, as to register them within their own accounting;
- at the date of the balance, goods such as stocks, receivables, availabilities, as well as debts of the joint venture, shall be registered within the annual financial situations of the associate running the joint venture’s register.
The accounting register of the expenses accounts from the joint operation, for the activity of the joint venture, shall be kept with the aid of account 458 “Expenses accounts from joint operations”, respectively that of deducting expenses and income made from joint operations, as well as the amounts transferred by co-participants.
The 458 “Expense accounts from joint operations” account is a bi-functional account;
- Under the credit of the 458 “Expense accounts from joint operations” account, the following are registered:
- the income made from joint operations transferred to co-participants, in accordance with the joint venture contract (701 to 781);
- the expenses received through transfer from the joint operations, including the depreciation calculated by the owner of the assets (601 to 681);
- the amounts received from co-participants (512, 531).
- Under the debt of the 458 “Expense accounts from joint operations” account, the following are registered:
- the income received through transfer from the joint operations (701 to 781);
- the expenses transferred from the joint operations, including the depreciation calculated by the owner of the assets, which is transmitted to the co-participant which holds the records of the joint operations, in accordance with the contracts (601 to 681);
- the amounts paid or transferred by the co-participants as a result of the joint operations (512, 531).
- The credit balance of the account represents the amounts due to the co-participants as a favorable result (profit) from joint operations, as well as the amounts due by the co-participants as to cover potential losses registered from joint operations.
- The credit balance of the account represents the amounts due to the co-participants as a favorable result (profit) from joint operations, as well as the amounts due by the co-participants as to cover potential losses registered from joint operations, as well as the amounts which are to be received by the co-participants from joint operations as a favorable result (profit).
In hopes that the joint venture approach within the present article is useful to you, we ask that you send potential questions or comments at the ROMBET association’s e-mail address – email@example.com. Thank you.
Anchidim Zăgrean is the vice-president of the ROMBET association, with an experience of almost 20 years in the gambling industry. As an accounting expert and fiscal consultant, Mr. Zăgrean is up to date with all legal provisions that regulate Romania’s gambling activity and offers professional analyses and opinions in this field.