The European Commission has finally concluded that UK plans to grant certain tax relief to producers of video games are in line with EU state aid rules. This was something that the industry had hoped would have been announced in the Budget last week, with industry body UKIE CEO Jo Twist calling the relief a “vital scheme” for UK games developers.
This is good news for the UK games industry as the video games tax relief will provide an incentive to developers to produce games meeting certain cultural criteria, although only around 25% of UK produced games are expected to be eligible for aid. Without this financial support the industry had long argued that the number of distinctive culturally British games is likely to decline considerably.
The Commission approved a similar scheme to support the French video games industry way back in December 2007, so this new relief should help to level the video game playing field. The lengthy delay for approving a UK scheme has been in part due to an investigation by the Commission as to whether such a scheme promotes culture without unduly distorting competition in the Single Market, as detailed under Article 107(3)(d) of the Treaty on the functioning of the European Union.