EC official games tax break details in full

EC official games tax break details in full
Michael French

By Michael French

December 12th 2007 at 11:51AM

Tax credit applicable to games 'that meet criteria of quality, originality, and contributing to cultural diversity'

The European Commission has officially announced its authorising the French aid scheme for games developers - but has said that eligible games are only those with a cultural element to "minimise possible distortions of competition in the European market".

EU bosses have given the OK to the policy passed by French politicians in January, confirming that the scheme will "enable video game manufacturers which are subject to taxation in France to deduct up to 20 per cent of the production costs of certain games" and that the scheme will run for four years.

However, "only video games that meet certain criteria will be eligible" with a "new, more detailed selection test makes it possible to ensure that only video games with cultural content may benefit from the aid".

The move comes at the European Commission was concerned that the original selection criteria would be open to too much interpretation and could distort the market.

Competition Commissioner Neelie Kroes said: “The French authorities have made significant changes to the scheme so as to essentially target video games with cultural content and minimise possible distortions of competition in the European market."

This means that the games eligible for the tax break will be subject to a more thorough selection criteria. Specifically, "French authorities have accepted the Commission’s request to largely include subcontracting costs within the eligible costs. These costs had initially been excluded, thus creating the risk that beneficiary companies would be encouraged to internalise their costs, to the detriment of European subcontractors."

The EC announcement added: "This tax credit may be granted only to video games that meet the criteria of quality, originality, and contributing to cultural diversity."

However spectators have pointed out this still means around 50 per cent of games produced in France in the past year would still be eligible given their artistic, stylistic and creative merits.

The EC investigation included an analysis of the global competitive market for games and taking into account similar subsidies in other parts of the world, and also checking to see if the French bill contradicted EU roles on state aid.

"After an in-depth investigation that began in 2006 the Commission has concluded that this measure qualifies for the exemption provided for by the EC Treaty for aid to promote culture," the EC statement added.