EU tax breaks: Overview

The European Commission has approved tax breaks for the games industry, following an application from the French government. Here we summarise all the information we have. Please note that we will update it with new information as we receive it.

Overview:

The decision, which has been pending for several months, should provide up to around 20 per cent of the cost of a game's development in the form of tax rebates.

Certain qualifying criteria must be met in order to receive the tax breaks, and it has been estimated that up to 50 per cent of games created in Europe this year would have qualified.

The decision applies to the whole of the European Union, but will only initially affect companies in France, because its government is at an advanced stage of legislation.

The rebate maximum is estimated to have been set at about EUR 3 million.

Criteria for qualification:

According to an AP report, EU officials were worried that the proposed tax benefits were so broad they could have been claimed for games with no cultural component.

"The French authorities have made significant changes to the scheme so as to essentially target videogames with cultural content and minimise possible distortions of competition in the European market," said competition commissioner Neelie Kroes.

As approved, the tax benefits would only apply to a game that meets the "criteria of quality, originality and contribute to cultural diversity," although the EU did not specify who is responsible for making that determination and if there would be an appeals process if a developer disagrees with the determination.

Reaction:

"All the EU has done is accepted that videogames in their own right are a cultural form and they've applied their systems for financing film productions to videogames."
--Tiga CEO and chair Fred Hasson

"This sends a signal to the entire continent that there's an opportunity. It's great for France, but there's more to be done across Europe."
--EGDF commercial director Alexander Fernandez

"By giving the green light to France's proposal, the EU commission has recognised for the first time that games are a form of cultural expression, very much like movies. This is an historical moment."
--Quantic Dream co-founder and president of APOM Guillaume de Fondaumière

"Convincing the UK government that a videogame has genuine cultural worth sounds like a tricky proposition given that their default position is that videogames as an artistic medium lie somewhere between child pornography and snuff movies."
--Free Radical Design boss Dave Doak