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Tax Breaks For UK Video Game Industry Approved

by Mike Futter on Mar 27, 2014 at 03:58 AM

The United Kingdom will see tax breaks for the video game industry following today’s approval by the European Commission. The deal will incentivize development in the UK, though the Commission ruling does propose a “cultural test” such that the subsidy will support games with “cultural content.”

The measure will provide relief of 25 percent of the tax burden on up to 80 percent of a game’s production budget (spent in the UK). It will not apply to endeavors designed specifically and solely for advertising and promotion or for gambling.

Each game will be considered as a separate entity, therefore larger studios with multiple games in development can take advantage as soon as a title enters development. The cultural test is likely to prevent this from being applied to some projects, though.

The final details of the test are not yet confirmed, but a proposal suggests that titles will be evaluated on the percentage of the game set in the UK or European Economic Area, the number of characters from the region, whether the story is British or related to another EEA country, how much of the dialog is in English, how much the game promotes British culture, the percentage of work accomplished in the UK, and the nationality of project leads.

The new tax relief cannot overlap with existing research and development breaks, of which some developers have successfully taken advantage. “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,” said Association for UK Interactive Entertainment CEO Dr. Jo Twist. “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.”

[Source: UKIE, Europa via Joystiq]


Our Take
The UK has an extremely rich development scene that has recently taken some hits with layoffs at three Sony studios and other closures. This will help nurture that community and hopefully create long-term job stability at studios.