Proposed UK games tax relief under investigation

European Commission launches "in-depth" examination of proposed tax break; prominent trade groups call decision a disappointment.

A tax relief program for game developers in the United Kingdom is under investigation. The European Commission announced today that it has launched an "in-depth" examination of the proposed tax break plan for the region.

The purpose of the tax break is to provide an incentive for developers to make games that meet certain cultural criteria. However, the European Commission questioned the need for the take breaks, as "there is no obvious market failure in this dynamic and growing sector and such games are produced even without state aid."

"The market for developing video games is dynamic and commercially promising. It is not clear whether the taxpayer should be subsidizing this activity," Commission vice president in charge of competition policy Joaquín Almunia said. "Such subsidies could even distort competition."

Under the proposed terms of the tax relief, the UK would introduce a 25 percent break on up to 80 percent of the budget for UK-developed games.

In addition to concerns about the need for such a tax relief, the Commission said it believes such a break could create a "subsidy race" between member states and has doubts about the merits of the proposed cultural test.

As Polygon points out, a pair of UK trade organizations voiced disappointment for the Commission's decision today to launch an investigation.

The Independent Game Developers Association CEO Dr. Richard Wilson called the choice a "very disappointing hold-up which if prolonged could jeopardize much needed investment and job creation in the UK's games industry." He pointed out that "this is a delay, not a defeat," noting that the UK's film tax relief also faced scrutiny before being introduced.

CEO of The Association for U.K. Interactive Entertainment Dr. Jo Twist also voiced displeasure for the investigation. In a statement, she claimed the proposed tax relief is "vital" for nurturing game talent in the region and expressed optimism that the measure will be successful in time.

"We are extremely disappointed that the European Commission has decided to open an in-depth investigation into production tax credits for the UK games industry," Twist said. "We believe this support is crucial in opening up the opportunity for developers to make culturally British games, but also as a vital incentive for development studios and large multinationals to base their development in the UK and nurture the talent here. We are still confident of having the scheme introduced and are fully committed to having it in place as soon as possible."

Written By

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.

Discussion

109 comments
Vodoo
Vodoo

This is a ridiculous tax break to have. Kudos to a government that is finally trying to get rid of the useless programs that cost tax payers money.

Mega_Loser
Mega_Loser

the union in europe has failed, break it up already.

garysingh34
garysingh34

Why does Eu need to get involved in domestic state issues?

AdmiralBison
AdmiralBison

What is this " cultural criteria" that needs to be met for this tax incentive?

jsmoke03
jsmoke03

tax break? really doesnt make sense to me if these developers arent losing any money

ilovethewitcher
ilovethewitcher

yeah fuck of out of the EU england, if you dont like the rules then fuck off, we dont need you

anfunny
anfunny

"The purpose of the tax break is to provide an incentive for developers to make games that meet certain cultural criteria."

Sounds like censorship to me.

Paul2004
Paul2004

Developers have been looking for a tax break for years now, when they finally get one they wants to stop it ?....what does this have to do with them anyway ?. With all the taxes here in the UK businesses do suffer, giving some incentive to the developers for decent games will encourage them and get gamers buying (which is what this is all about). This isnt gonna affect any other country IMO so whats the real purpose of this.....

ScreamDream
ScreamDream

With a taxes (VAT, etc) in the UK among the highest in the world there won't be too many new offices opening.  

Tixylixx
Tixylixx

I don't see why they should get a tax break, why should the tax payer shell out ? I mean I want a 25% discount on games from my own country then.

JimmeyBurrows
JimmeyBurrows

Can't honestly think of anything the European union has done for the UK, other than allowing other countries to avoid the very same rules they set to make sure France and Germany all get the big business. This is probably just another way for them to try and screw us over again... They shoudn't even get a say in what we put taxes on...

highlanderjimd
highlanderjimd

Leave games alone ffs Church are Tax free. Tax them, The catholic church has more money than their own fucking god!!!!!

TJSpyke
TJSpyke

@Vodoo Um, maybe you should learn what a tax break is. A tax break doesnt make anyone else pay more taxes. Giving these taxbreaks to game companies is not needed, but it wouldnt hurt taxpayers.

TJSpyke
TJSpyke

@garysingh34 The EU has rules and regulations that all members agree to. Doing something that unfairly puts you ahead of others is not OK, and the EU is saying that the tax-break is not fair because it's not needed (the video game industry is not failing, and developers are making game even without state aid). Basically, the tax-break is not needed.

hughobrien
hughobrien

@garysingh34 It also happens to Britain's benefit too.  EU members can't screw each other over as easily as, say the US could.  It's not a case of Germany and France picking on the UK.  The idea is to stop governments risking the taxpayers money.  

Remember that it was the governments lack of oversight or their own finances which caused the current economic crisis.  The EU had laid down regulations which governments ignored.  While they're not perfect, they're not the interfering bad guys that many seem to make them out to be.  They are, after all, all made up of  EU citizens.

LiquidGold
LiquidGold

@garysingh34Jealousy comes to mind. They need to stay there in their backwards EU towns and stay out of the UK

Warlord_Irochi
Warlord_Irochi

@AdmiralBison Maybe something like what the industry has in Germany? If you make an educational game you get fund and tax relieve from the government. But you need to make it educational.

TJSpyke
TJSpyke

@jsmoke03 Tax incentives are used to encourage developers to either stay in that location or try to lure other developers to move to a location.

LukeWesty
LukeWesty

@ilovethewitcher  

England need to step out of the EU, we are packed of Polish etc, new rules are needed the EU is killing us, we need to be like Australia and stop homing any European that wants to mozy on into England.

StolenDiagram
StolenDiagram

@ilovethewitcher Be careful what you wish for. If the UK leaves then whichever backwards part of the region you live in could become Brussels' new bitch...

TJSpyke
TJSpyke

@Tixylixx You do realize giving them a tax-break does not mean other people will pay more taxes? And giving tax incentives to lure businesses in is a common practice in every industry.

V3rciS
V3rciS

@JimmeyBurrows Just get out of the EU and stop with the whines. If you think you can do better alone in this globalized world that's fine... just finally take that decision and vote to leave the bloc. Will also bring some peace to the rest of Europe imho.

OldKye
OldKye

@highlanderjimd Vatican is it's own independent governing body(city sate) in the middle of Rome, Italy couldn't tax them if they wanted too lol.

Heck they have their own military force, hows them apples.

surferosh
surferosh

@highlanderjimd   sadly that is what religion has become nowadays.. the true practitioners of religion as it should be are very rare... 

V3rciS
V3rciS

@highlanderjimd Oh yes... we definitely need to charge god damn Churches and tax Jesus as well...

AdmiralBison
AdmiralBison

That's educational. Here it's not specified.

They needn't be vague about it.

"Cultural criteria" can mean anything.

norabbitnofun
norabbitnofun

@TJSpyke @Tixylixx And 25% tax break impacts less than 25% of a games' budget, not to mention that when companies get such a break, their games stay at the usual market price...

So in the end gamers do not gain from this. This is just about UK giving developers an incentive, either to maintain its local developers or to attract new investments.

markg1150
markg1150

@V3rciS @JimmeyBurrows 

believe me we want a vote, and we want to leave ,its the scum bag mps that dont want to give up there cushy european hols/meetings.

the tax break thing is just trying to drum up some work and business in the uk so thats why there investigating it beacuse it might take work out of the rest of europe. they do any thing to cripple us

TJSpyke
TJSpyke

@V3rciS @JimmeyBurrows Right, cause the EU is in such a good state. In the last 3 years, 5 EU countries have needed bailouts from the other members.

TJSpyke
TJSpyke

@OldKye You are wrong on the military, the Vatican doesn't have its own military. They employ 110 members of the Swiss Guard for security though.

LukeWesty
LukeWesty

@V3rciS

I totaly agree with him. The Catholic Church is a joke, they are just a well oiled business worth billions. You wouldn't see much of those billion sitting under the vatican going to good use.

TJSpyke
TJSpyke

@khankalili Except you are wrong on your claims kiddy. The US did NOT get a bailout, the US PROVIDED a bailout to its own banks (whereas EU countries need to get a bailout from other countries). The deficit has been shrinking every year for the last 4 years. Not sure where you got his "statistically a third world nation" lie from. Especially since we give financial aid to almost every country in the world. Maybe when you learn the facts, you can join us too

khankalili
khankalili

@TJSpyke @Warlord_Irochi Ummm... the US did need a bailout...they got it from their banks. They also have a huge deficit in their budget, haven't even started putting the last two wars into their budget and are statistically a third world nation... so maybe you should be careful about the 'kiddy table' bullsh*t.

TJSpyke
TJSpyke

@Warlord_Irochi Big talk from a doofus with "Warlord" in their screen-name. I obviously read more than you do since you are so delusional. Last time I checked, the United States has never been bankrupt (like Iceland), never needed to be bailed out by other countries, never had the economy collapse.


Maybe when you grow up and see how the world is, and stop being so ignorant, you can leave the kiddy table and join us grown-ups in the real world. You are mad that I am intelligent and well-read.

Warlord_Irochi
Warlord_Irochi

@smurfa1  Only an uninformed ignorant with a big tongue on the internet could say something against the citizens of those countries. They resist and they fight (and I'm only talking about those riots). The time you spent posting that ignorant crap would have been enough to check a newspaper and see what reality is. From Italy and Spain, for example, you get some of the best engineers and biologist in the world. Spain also has a stock market volume that is almost 2k bigger than the German one, and that is in the middle of a crisis, with it's main economic sector destroyed (construction). I would like to see how the Americans or the British would survive under those conditions.

But whatever, You are already paying your ignorance by being a puppet. Let's hear you talk when you go through the same in whatever country you live into. Until then don't pester us with your rubbish comments.

DexCasas
DexCasas

@smurfa1 @TJSpyke @V3rciS @JimmeyBurrows

You have no idea of what you're talking about maybe if the fuckheads at EU hadn't destroyed our primary and secundary sectors we wouldn't be being turned into slaves like we are right now and being portayed as the bad guys in the process, but then again, it's what they always wanted.

smurfa1
smurfa1

@TJSpyke @V3rciS @JimmeyBurrows This is partly because the PIGS (Portugal Italy Greece Spain) has shitty economy, corrupt politicians and citizens who doesn't pay taxes and demand sallary for 13 months of the year.

TJSpyke
TJSpyke

@OldKye They are to protect the pope and other church buildings. It's confusing , but there is a difference between the Holy See (which is the church) and Vatican City (which is the actual country). The Swiss Guards protect the pope, the church, etc. They are basically body guards, not a military.

OldKye
OldKye

@TJSpyke @OldKye How is 110 trained military professionals to guard exactly one complex under the direct supervision of the Vatican not a military force? 

Isn't that what I said? if i had said "standing army" you'd be right but a military group or force can be 5 people.


Vojtass
Vojtass

@shingui5 @OldKye Actually cardinal Jozef Glemp died 3 months ago. He was a primate of Poland for over 20 years, Very modest and good man.

Mega_Loser
Mega_Loser

@V3rciS

notice the poster in the back, these fine people did not go to the priest but the other way around.