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The relief for video game companies based in Ireland has been described as a ‘huge moment’ for the industry.
A tax credit that seeks to boost the digital games sector in Ireland has been formally signed into legislation by Government today (21 November).
Announced as part of Budget 2022, the digital games tax credit takes the form of a refundable corporation tax credit available to video game development companies that are based and pay taxes in Ireland.
It will be based on qualifying expenditure incurred on the design, production and testing of a digital game that promotes Irish or European culture in some form.
“Ireland is already a world leader in other areas of the audio-visual sector including film, television and animation production,” Minister for Finance Paschal Donohoe, TD, said at a launch event by digital gaming company Black Shamrock today.
The launch event at the Guinness Enterprise Centre was also attended by Minister for Tourism, Culture, Arts, Gaeltacht, Sports and Media Catherine Martin, TD.
“I believe that this credit will be instrumental in replicating such successes in the digital gaming sector,” Donohoe added, noting that the relief gives Ireland a chance to be competitive in an industry estimated to be worth up to €260bn.
‘Necessary and appropriate’
Available at a rate of 32pc of eligible expenditure, the tax credit has a limit of €25m per project. There is also a minimum spend requirement of €100,000 for each project.
Martin said that the digital games tax credit will support indigenous games companies in Ireland, boost investment from overseas companies looking to locate in Ireland, and create jobs in the creative and digital arts sectors.
The scheme required approval from the European Commission under EU state aid rules and was assessed under the article that enables member states to grant aid to promote cultural and heritage conservation in the EU. It was approved in late September.
The Commission found the scheme to be “necessary and appropriate” to promote the development of cultural and educational video games. It also said the measure is “proportionate” and does not raise any competition concerns with other member states.
‘Huge moment’ for the industry
Craig Stephens of Imirt, the Irish video games industry association, said that the tax credit’s launch is “a huge moment” for the industry in Ireland.
“This globally significant 32pc credit will support our existing games development talent, plus attract major investment from overseas,” he said.
The regulations will now be signed by the chair of the Revenue Commissioners, allowing digital games development companies to apply for an interim certificate from Martin’s department for a qualifying digital game.
It is expected certificate holders will then be able to apply for remuneration under the credit from Revenue starting 1 January 2023.
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