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The Romanian gambling industry is scrambling to water down government plans to introduce a 40 percent winnings tax on players.
As part of a wide ranging package of tax changes expected to be approved this month, the Romanian government wants to begin taxing all gambling winnings at 40 percent.
The industry is lobbying the government to water down the proposals, ideally by allowing for a progressive model similar to the one currently in place, said Cosmina Simion, managing partner at Bucharest-based law firm Simion & Baciu.
Winnings in Romania are currently taxed on a progressive scale from 1 to 25 percent.
The industry hopes it can convince the government to introduce a new sliding scale starting at 1 percent, with the 40 percent rate only kicking in for gambling income of more than roughly the equivalent of €150,000.
Simion said talks with the government were ongoing and it was “still very touch and go” what will end up in the final tax bill.
A statement from local online gambling trade group AOJND said the proposed 40 percent rate would push players to the black market.
“I have often emphasised that Romania is a successful model in terms of gambling legislation. But this situation depends on the ability of the authorities to maintain an attractive legislative and fiscal framework,” said the group’s president, Odeta Nestor, citing figures that Romania currently channels 90 percent of online players to the licensed market.
She said that operators attempting to cover the costs for players would result in the government’s tax take from gambling being halved. Several sports sponsorships would also hang in the balance, Nestor claimed.
“Online gambling is primarily an entertainment industry, not a source of revenue for players. According to AOJND data, over 80 percent of those who withdraw money after participating in gambling, withdraw amounts of up to a maximum of 1,000 lei, but most are much smaller, in the order of several hundred lei.
“Basically, we are mostly talking about cases in which the player does not pursue the win at any cost but the pleasure of competing, in this way online gambling being rather a source of reducing daily stress," said Nestor.
Online gambling revenue among licensing Romanian companies soured during 2020, according to VIXIO estimates.
Gross gaming revenue climbed 87.6 percent year-on-year to RON2.56bn (€158m), although the pace of growth has since slowed to 9 percent in 2021, with GGR reaching RON2.79bn (€565m) in 2021.
The rate of growth in 2020 was the highest of any established regulated online market in Europe.
