The UK game industry has won its seven-year battle to secure a tax break for games that qualify as “culturally British”.
The European Commission has approved the tax breaks for the UK video game industry, after Brussels dropped its objections to the plan.
Initially, the tax breaks were being question over state aid rules, but the EU Commission now states its “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,” said Joaquin Almunia, EU competition chief.
However, although this is good news for the industry, not all UK gaming companies will benefit from the tax breaks.
Any projects looking to be approved for the tax breaks must pass a cultural test first. Points are awarded for certain job roles carried out by UK staff, the percentage of game development undertaken in the UK and whether at least half of the game team are from the UK.
In terms of game content itself, points are awarded based on the percentage of the game based in the UK or an EEA state, the number of characters that are from the aforementioned locales and whether the game features a “British story” or that relating to an EEA state.
More points are also allocated to the game’s use of the British language.
What’s more, the European Commission added that only games that are of cultural value will be given the additional aid. Currently, only around 25 per cent of UK developed titles would qualify.
“Tax breaks for the British games industry have been a very long time coming, but this is far from being the end of the matter,” said Mark Gerhard, boss of Runescape maker Jagex.
“Studios across the UK need to collectively show that the fight for their introduction has been a worthwhile one by maximising their potential to deliver a robust, expanding games industry in this country. Our industry should be held in the highest regard, strengthening the British economy and fuelling job creation, both things which tax breaks will help reinforce.”
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