IGEA on tax breaks for devs in different countries
Video games industry association IGEA is calling on the Australian government to introduce a 30% tax offset for video game development in the country. According the IGEA’s report discovered by Robot Teddy‘s Callum Underwood, a 30% tax offset is available to the country’s animation and digital effects sectors, but not video games. Absence of tax incentives and other support, the report argues, makes Australia one of the most expensive places in the world to make video games.
While the UK, Canada and the US have become attractive locations for establishing new studios due to their advanced economies with a significant, diverse, well-trained and English-speaking talent pool, Australia is missing out on the economic growth opportunities associated with video games development.
The paper then goes on to list the funding schemes or tax offsets available to video games developers across the globe.
Canada
In Canada, tax offsets are mostly implemented at the provincial rather than the federal level. Tax incentives for game development have been introduced in most provinces. In Manitoba, Newfoundland and Labrador, and Ontario, there are programs for video games developers providing a tax offset of 40% of labour costs. In Nova Scotia, under the Digital Media Tax Credit, a video game developer may choose between either a tax offset of 50% of ‘qualifying expenditure’ or a tax offset of 25% of ‘total expenditure’.
In addition to those incentives, the federal Canadian Government, as well as many provincial governments, provides direct funding for video game development.
Europe
The European Commission provides direct funding of up to 50% of eligible video game development costs throughout Europe via the Video Game Development Scheme. Many individual European states (and some sub-regions within those states) also provide direct funding and incentive programs for video game development. The paper contains information on incentive programs of Denmark, Finland, Italy, Slovakia, Spain and Switzerland.
France and Germany are highlighted in the report for their multiple provisions existing to nurture game development in those countries.
For example, The French Government has established the Video Game Tax Credit which provides a tax offset of 30% of the production costs for video game developers.
The French Government also provides various direct funding programs for video game developers under the Video Games Support Fund, including the ‘Funds for Original Creations’, which provides funding of up to 50% of a project’s budget, and the ‘Funds for Prototype Production’ which provides funding of 25% (35% for small-to-medium-sized businesses) of the R&D costs incurred during video game pre-production.
In Germany, there is the German Games Fund comprising an initial €50 million in total funding. The Fund provides funding of 25% to 50% of total game development expenses, with 50% provided for prototypes and smaller productions, and 25% provided to projects valued at over €8 million.
United Kingdom
The UK Government has established the Video Games Tax Relief (VGTR) which provides a tax offset of 20% of production costs for video game developers. This is in addition to direct funding provided by the government mostly through the UK Games Fund.
United States
While the US does not need a federal tax offset for video game development given that it is already the home of much of the global video games industry, tax offsets for game development have nevertheless been introduced in around 20 US states, primarily to lure game studios away from the sector’s traditional base of California. For example, in New Mexico, the Refundable Tax Credit worth up to 35% of production costs is available to game developers.
The federal government additionally supports video games with an educational or social focus.
The report also covers the tax relief programs of New Zealand and Singapore.
The full report with all the links to various funds and programs can be found here.
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IGEA (Interactive Games & Entertainment Association) is the peak industry association representing the voice of Australian and New Zealand companies in the computer and video games industry.
