Romania’s plan to increase taxes on its gambling industry is moving forward. Unfortunately, however, it is also adding more taxes, which could prove detrimental to the growth of the legal sector.
At the end of June, Romania confirmed that it would implement a 40% on online gambling withdrawals. On July 15, the government officially put the measure in place, but on a sliding scale. In addition, licensing fees are going up for both land-based and online operators.
At the same time, it approved another initiative that will add a 5% tax to gambling advertising. However, it will give a break to sports organizations or federations that offer marketing in stadiums and gyms. These won’t have to pay the tax.
Gaming Operators, Players to Open Wallets
As of August 1, players will have to pay a withholding tax on their income from gambling. The rate is 3% for amounts up to RON10,000 (US$2,069) and 20%, plus RON300 (US$62.10), up to RON66,750 (US$13,823). Anything above that means handing over to the government 40%, plus RON11,650 (US$2,413).
Companies producing and/or distributing remote gambling software will also pay more. Their annual licenses are now RON46,900 (US$9.713), up from RON29,621 (US$6,134). They will also pay taxes on a sliding scale, with some rates increasing to 23% of gross gaming revenue.
In addition, the fee for the mandatory “documentation analysis fee” is increasing. When submitting an application for a remote gambling license, operators previously paid RON12,342 (US$2,554). However, now they will pay RON14,810 (US$3,065).
That money is just for the analysis; there is still a fee to receive the license. This is increasing from RON41,963 to 46,900 (US$8,690 to $9,703).
Gambling companies will now also be subject to fines of RON20,000-40,000 (US$4,138-8,276) if they violate various statutes. For example, they cannot use the word “casino” in their names, except for organizers who operate casino activity, and then only at their authorized locations.
Operators will need to verify the validity of their customers’ identification. However, the onus is on the customer to provide valid proof. These players risk fines of RON20,000-40,000, just like before.
Marketing Becomes More Expensive
Marketing and advertising contracts for the promotion of brands, platforms and gambling activities in public spaces and on public roads, or through a television service, must be communicated to the ONJN, Romania’s gaming regulator. The responsible party has to present the information within five working days from the date of launch.
Gambling organizers owe advertising fees for gambling activities, as well. In the case of advertising contracts managed by a third party that promotes a legal gambling service in the country, the advertiser is responsible for the fee.
The advertising fee for gambling activities represents 5% of the value of the advertising contracts. Payments are due by the 25th of the month following the month in which the entities signed the agreement. In the case of contracts that provide for periodic payments to the provider, the obligation to pay the fee is due on the last day of the month in which the obligation to pay becomes due.
The Romanian government projects that all of the tax changes will positively impact the country’s fiscal budget. It believes that it will add around 40% annually, increasing the budget by RON530.4 million (US$109.84 million). However, what it may not be taking into account is the shrinkage that will come as more players seek out cheaper offshore alternatives.
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