Lifeline for game tax breaks across EU

European Union member states will still have options to apply for game tax breaks even if the confederation blocks France’s current application, state officials have told Develop.

Last week it was revealed that a European Commission policy for tax relief in France had expired at the turn of the year.

It means that, currently, game studios in France cannot apply for tax relief measures.

French officials are calling on Brussels to consider reintroducing the scheme, but Develop understands there is resistance to the measure.

Ultimately a block to France’s tax relief measures would set a precedent for all other EU member states to follow.

Yet officials at the Department for Culture Media and Sport say that such a block would only apply to France’s very specific approach for game tax breaks.

The department says a general ban would not be enacted, because EU member states could still apply for tax breaks for a range of other reasons, which the European Commission could accept providing there is a convincing demonstration of the measure’s necessity and proportionality.

In the UK’s case, trade body Tiga said an application could be made “on the grounds to correct a market failure or address a market distortion”.

If the Commission forbids France to apply for tax breaks on cultural grounds, then it would mean EU states would have to find a different approach, or even apply on cultural grounds with a different case.

Brussels is still considering France’s application for game tax breaks, and despite suggestions of resistance there is still a chance it will be enacted.

Guillaume de Fondaumiere, president of the European Game Developer Federation, said blocking tax breaks on this issue would be “an historic mistake”.

Yet Tiga CEO Richard Wilson is hopeful that the EU block is lifted.

“Given that the film industry benefits from a tax credit on cultural grounds it would be surprising if the European Commission was to say that a tax break for the video games sector on cultural grounds was no longer possible but uphold the existing basis for a tax credit for the film industry,” he said.