Romanian Government Changes to Gambling Tax Policy for 2019
The Romanian government is changing its gambling tax for online and land-based fees, sometimes known as “turnover taxes” or “gambling participation fees”. The gambling turnover tax has been reduced to 2%, which is an improvement for gaming operators.
Previously, online operators were taxed 5%, while land-based casinos had a turnover tax of 3% per an emergency ordinance.
For Romanian gambling operators, these gambling participation fees are in addition to a 16% tax on winnings that gambling operators have to pay. In gambling, “turnover” is the amount of money a player wagers. In sports betting and poker, the turnover is called the action. Winnings are the amount of cash won off the bet.
So if a gambler wagered $1000 on various games, but lost $100, then the operator now would pay a 2% tax on the $1000 wagers ($20) and a 16% tax on the $100 the player lost ($16). Since players often wager a lot of cash, lowering the turnover tax is a big win for operators.
February 25 Tax Deadline
Though less taxes sounds like win-win for everyone, one aspect of the tax change could be a problem for operators. These taxes will be retroactively applied to last year’s revenue for those operators with a Romanian license and given a tax deadline of February 25.
This retroactive charge is an attempt to help fund the government’s budget requirements, bringing forth the tax deadline by several months. For operators that does not have a large reserve of operating cash, it could prove troublesome.
2009-2015 Back Gaming Taxes
A similar action was taken back in 2015. Operators obtaining a gaming license were responsible for paying back taxes. This came out to be 20% of the entire revenue Romanian gaming operators generated since 2009. The last-minute decision by the government was in hopes of reaching unmet goals, but left some gaming companies in a bind.
Players have had issues in the past, as well. In the past, players were required to file a tax statement for all revenues won that year by May 25th of the following year. Once the income of revenue was determined, the tax authority would determine the tax due which the player would then be required to pay within 60 days.
With the new withholding taxation mechanism, the responsibility of the player should be simplified. Players will no longer need to hassle with reporting revenues or waiting and paying for what tax was determined. This also takes the task of having to administer tax receivables for thousands of Romanians a lot of added work for the tax authority away.
Confusion in Romanian Gaming Industry
The abrupt switch to the new tax withholding caught many operators off guard and did not allow them adequate time for the technical side of the switch. Some operators might have to borrow cash to pay the tax, which would amount to losses due to interest payments.
Sadly, for operators, the new tax withholding mechanisms were implemented before they were able to adapt on a technical level. The responsibility for tax will then fall onto the operators as they will likely be responsible for covering the tax themselves.
Some gaming groups have complained that the changes might lead to discontent from longstanding customers. Operators might run into the issue of disgruntled players believed the organizer would be withholding taxes from their withdrawal amounts.
Update: January 31, 2019 Deadline
In an update, the deadline has been moved up a second time. Romanian regulators now have moved up the deadline for all previous year’s revenue to be submitted from February 28/29 up to January 31. Though in the future these changes might be beneficial all around the board, it could cause issues with some online and land-based gaming companies. If the taxes are not paid by the new deadline, it could lead to fines or loss of a gaming license.