France to offer tax credits for games development

France to offer tax credits for games development
Michael French

By Michael French

February 2nd 2007 at 9:00AM

French Parliament has approved a bill granting tax credits for games developers, a move designed to secure and encourage a healthy interactive entertainment sector within the country.

The measure covers 20 per cent of a company's production costs, up to a maximum of 3 million euros ($3.91 million) a year. Qualifying games must have "a cultural dimension", France's Ministry of Culture said in a statement.

"[The bill] recognizes the cultural character of the video game, which involves several branches of artistic talent: writers, directors, graphic artists, musical and sound creators," said the statement, which also acknowledged the country's large audience of gamers, numbered at 15 million.

The statement also said that theEuropean Commission has begun a formal examination of the proposed measure which would be completed in a few weeks.

Prime Minister Dominique de Villepin had promised over a year ago that a tax credit system for games would be introduced. Previously the country had offered grants for games developers, although that offer only funded new game concepts.

Comparable tax credits schemes are not uncommon elsewhere in the world - although they aren't as widespread as the industry would like, of course.

Ironically it is French-speaking Quebec which has offered the best deal to games developers.

Companies based in the province get 30 per cent of their production and creative staff's salaries from the government - and if a team is working on a French-language version of the game an extra 7.5 per cent is thrown in as well. (It's expected that this is how the 'cultural element' clause will work in France as well.) Quebec also offers an R&D tax credit of up to 40 per cent, as well as other initiatives.

French publisher Ubisoft's Montreal studio has benefitted most from the Quebec tax breaks - it's targetting a workforce of over 2,000 by the end of the decade, a growth plan that wouldn't be possible without the government support.