EGDF president rejects concerns that cultural tax breaks may have negative impact
The president of the European Game Developer Federation has brandished fears against game tax breaks as “fallacious” and “not serving the interest of the British and European games sector”.
Guillaume de Fondaumière – also the COO of Heavy Rain studio Quantic Dream – took issue with concerns Develop heard from publishers and trade bodies surrounding game tax breaks.
“Having recently released a game that benefited from tax breaks in various forms [Heavy Rain], I have yet to discover ‘new laws, revised tariffs’ that would have [been] imposed on me or my publisher,” he said in reference to the article.
“The arguments mentioned in your article are simply fallacious and do not serve the interest of the British and European games sector,” he added.
The news item itself is Develop’s first step to bring into public discussion the private fears surrounding games tax breaks in the UK.
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Develop has been told from over ten trusted sources that at least one global publishing company had campaigned against game tax breaks in the UK.
The reasons why a company would oppose game tax breaks are complex, vague and potentially embarrassing for a publisher. Some of those fears, however bizarre they might seem, were expressed sincerely and thus outlined in the report.
Some of the concerns, such as cultural tax breaks resulting in the reclassification of games as audiovisual products, had already been partially addressed by the European Commission.
As cited in this document (pg 8, point 64) the European Commission ruled that games can be cultural and still be software.
And yet the ISFE told Develop today that it still is concerned that games would be classified audiovisual products if applied to a cultural tax test.
de Fondaumière concluded: “A number of countries or regions are "experiencing" incentives in the form of tax breaks (since decades for some now), using cultural exception status under WTO/EU laws, and it has yet to be proven that such incentives have had anything but extremely positive impact on both developers and publishers taking advantage of these.”
We have both the developer organisations (TIGA and EGDF) coming out strongly in favour of cultural based tax breaks.
But the story from the publisher side is less clear. The ISFE has made no comment (that I have read) but previously opposed a similar scheme for the French. ELPSA has expressed disappointment at losing the tax breaks deal but is clearly behaving defensively with the "no witch hunt" statement. It seems to me that the ISFE, ELSPA and its other members are secretly hoping for a replacement incentive scheme based on the technology rather than culture.
I this secretive feud, which has apparently been going on for many years now, between these organisations is damaging both groups. I don't see why we can't have incentives targeting both culture and technology. After all, games are a mixture of both.
By all means, lets have groups pushing both angles. But when one looks like achieving some success, let's have full and public support from both sides, and not the petty behind-the-scenes back biting that we've recently seen.
Lets go one step further (i.e remove the need for a cultural test) and provide generous incentives and tax breaks for any investor/developer in UK - in addition to low corporation tax rates.
Here's a thought, a non profit publisher (so it re-invests any profits it makes).
If developers could get the money made from their games, there'd be a hell of a lot more developers out there.
Even at 50/50, that would be much better than a traditional publisher deal (20%, and you have to pay for the development costs out of that, ha ha ha).
I can't include Steam or XBLA, as they give bigger royalties (70%), but you don't get development funding, and without that, you can't make games.
Banks won't lend to developers (and certainly not start ups), so where does the money come from? Only publishers, who continue to rape developers, which leaves us with...where we are now...publishers post profits, developers make great games and go under.
