Romania's New 2% Turnover Tax on Online Gambling Takes Effect

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Romania has moved ahead with a new 2% turnover tax on online gambling operators to fund social welfare program

Romania-licensed online gambling companies woke up on New Year’s Day to a new taxation reality as the government of the southeastern European country introduced late last year an additional tax on the practice, seeking revenue for a costly social welfare program.

Government Emergency Ordinance 114/2018 was published in the nation’s Official Gazette on December 29, 2018 to officialize a monthly 2% tax on gambling turnover. The new tax comes in addition to the annual license fee and ordinary tax each locally licensed operator is obligated to pay. Up until the beginning of 2019, gambling companies that had obtained licenses from the Romanian regulator, Oficiul National Pentru Jocuri de Noroc (ONJN), were taxed at 16% on revenue from local customers.

The new taxation regime took effect January 1. The 2% turnover tax is payable by the 25th of the following month, which means that operators will have to make their first payment by February 25, 2019.

Romania re-regulated its online gambling market in 2015, and ONJN has issued more than 20 licenses for the provision of online gambling services on the territory of the country since then. The start of the new regulatory regime was marked with a demand by the Romanian government that companies seeking authorization to enter the local market pay a retroactive 20% tax on their revenue from Romanian customers since 2009. The surprising back tax resulted in Romania collecting nearly €270 million in gambling taxes in 2015.

Initial Plans latest version of GEO 114/2018 took a more liberal approach toward gambling companies servicing Romanian players and how these would be taxed, come 2019. First news that the country’s government was preparing to roll out a new tax emerged in mid-December.

Back then, Romanian lawmakers were discussing the introduction of a 5% turnover tax for online gambling operators and of a 3% turnover tax for land-based companies. The original draft of the ordinance also contained provisions under which the new turnover tax would have applied retroactively to 2018.

The possibility of being required to pay a retroactive tax on turnover prompted a massive outcry from the gambling industry. The powerful negative reaction resulted in the Romanian government converting the proposed tax from an annual to a monthly one that would not apply retroactively.

Aside from the tax, GEO 114/2018 also introduced a requirement for licensed operators to contribute a set annual fee of €5,000 for online gambling operations and of €1,000 for land-based operations. The money is set to be used for initiatives aimed at promoting responsible gambling and assisting people suffering from gambling addiction.