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EU approves tax breaks for games

Wed 12 Dec 2007 9:22am GMT / 4:22am EST / 1:22am PST

The European Commission has approved the French government's request to apply film industry tax breaks to the games industry.

The European Commission has approved the French government's request to apply film industry tax breaks to the games industry.

The move will allow for around a 20 per cent rebate on the cost of development for games that fall under qualifying criteria - and it is estimated that around half of all games developed this year would have qualified.

Both Tiga and the EGDF had argued strongly that such a move should go ahead, in order to help lessen the unbalancing effect that support from other countries such as Canada was having.

In a statement, the EU said that only games that meet the "criteria of quality, originality and contribute to cultural diversity," will be eligible, with the scheme authorised for a period of four years.

"Given in particular the small market shares of the manufacturers covered by the measure, the Commission is satisfied that the aid will have a limited effect on competition and on trade between the Member States," said the Commission.

"This effect will be even more limited by the fact that the French authorities have accepted the Commission's request to largely include subcontracting costs within the eligible costs. These costs had initially been excluded, thus creating the risk that beneficiary companies would be encouraged to internalise their costs, to the detriment of European subcontractors," detailed the report.

The EU investigation was prompted by the French government's proposal late last year, and conditions then included a test for originality, quality and promotion of European cultural diversity.

At the time the EU's competition commissioner, Neelie Kroes, warned: "We must be sure that the measure will promote only genuine cultural projects and that it will not have the effect of an industrial policy instrument in favour of the videogames sector."

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