EU indicates it will lift block on games tax breaks

The EU may lift its current block on game tax breaks, the European Commission’s competition directorate-general has indicated.

The EU’s cultural exemption clause for games industry tax breaks, which started in 2007, ended on January 1st this year and has yet to be extended amidst reported resistance to the scheme.

Since then countries such as France, which is home to studios including Quantic Dream and Ubisoft, have not been able to apply protocols allowing for tax relief, with general State Aid effectively banned under EU law.

This has struck fears that many developers and studios may now look to move abroad to countries such as Canada, known for its generous tax breaks, if the block on cultural exemptions is made permanent.

But speaking in response to concerns raised by the industry and Scottish MEP Ian Hudghton, the ECC’s directorate-general Wouter Pieke, who must approve the clause’s renewal, suggested that potential tax breaks may return to France and the EU, although he did not expressly state a timescale for the clause to be renewed.

“I fully agree with you that games constitute an important sector of creative industries in Europe and can reassure you that the Competition Directorate General of the Commission is not considering plans to halt an existing tax relief on the games industry,” said Pieke.

He added: “With regard to possible relevant plans of Member States for the future, each project will continue to be assessed by the Commission on its merits under the State aid rules of the Treaty.”

If the cultural exemptions are to be re-introduced, there is still no guarantee it would affect the UK, which is thought to represent about 40 per cent of games produced in Europe, in the near future.

This government has so far refused to relent to lobbying pressure on introducing the measures in the country.

Hudghton says however it is important that not only is the tax break clause extended, but that the UK also makes its case for exemptions to bring the industry on a level playing field with international competitors.

“It is clear from Mr Pieke’s letter that the Commission is relaxed about extending tax concessions to the games industry,” said Hudghton.

“It is also clear that it is up to the UK Government to join the Scottish Government in making the case for tax breaks for the industry in Scotland so that our homegrown games industry can compete on a level playing field with their international competitors.”