Tax Breaks for UK Video Game Makers Approved

European Commission sanctions relief for video game makers

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Tax Breaks for UK Video Game Makers Approved
"The European Commission has concluded that UK plans to grant certain tax relief to producers of video games are in line with EU state aid rules. The Commission has found in particular that the measure provides incentives to developers to produce games meeting certain cultural criteria, in line with EU objectives." So says the ruling that could inject new capital into game development in the United Kingdom.

The EU ruling has been met with joy unbounded by the UK industry with UK trade body, Ukie's CEO Dr Jo Twist stating, "This is a huge boost to the UK games and interactive entertainment sector and the start of a great new era of games production in the UK. We are delighted the European Commission recognised the clear market failure for the production of games with a British and European flavour, using UK-based creative and highly skilled talent.

“We are extremely happy to have played a part, as a strong collective voice for the industry, to get the scheme over the finishing line. We have been in constant contact with government throughout the process and have applied pressure and evidence for the scheme to be introduced at every opportunity."

For its part, the European Commission states, "Following an in-depth analysis of these comments and some amendments proposed by the UK, Commission Vice-President in charge of competition policy Joaquín Almunia concluded: "Our initial doubts have been dispelled. The proposed aid for video games is indeed focusing on a small number of distinctive, culturally British games which have increasing difficulties to find private financing."

"The video games tax relief will provide an incentive to video game developers to produce games meeting certain cultural criteria. After the Commission opened an in-depth investigation, the UK removed the originally envisaged territorial spending obligations imposed on beneficiaries of the scheme. The UK demonstrated in particular that the proposed cultural test ensures that the aid supports only games that are of cultural value. Only around 25% of UK produced games would be eligible for aid. Without this support the number of new culturally British games is likely to decline considerably."

As yet hard numbers are even harder to come by in terms of how much the UK taxpayer will expect to see returned on its investment - by the initial loss of tax revenues - and over what period. That said, it's great news for the UK's indigenous development community.
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