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Full approval has now been given by the European Commission for the new digital gaming tax credit scheme to launch in Ireland. Could your games development company benefit?
Full approval has now been given by the European Commission for the new digital gaming tax credit scheme to launch in Ireland. This long awaited €20 million tax credit scheme is designed to support the development of digital games specifically promoting Irish or European culture.
The concept of a digital gaming tax credit was first announced in the 2021 Budget. It’s essentially all about encouraging projects that enhance the European digital audiovisual sector whilst bringing about a more varied cultural landscape.
This lucrative new tax relief offers companies that are developing digital games a tax credit of up to 32% per eligible game. It can either be claimed annually, or once the game’s development has been completed.
Any company that is resident in Ireland can claim the digital gaming tax credit. Alternatively, a claim can still be made if the company is based in the EEA and operates in Ireland via an agency or branch.
To be eligible, the game must integrate some form of digital technology and be published on an electronic medium, for example a games console. It must also be interactive (or as least incorporate three or more of the below):
The credit can also be claimed in relation to money spent on the development, production and testing of the game.
So your company can claim the digital gaming tax credit, you need to get certification from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media. You’ll be judged on things like:
Companies claiming the digital gaming tax credit will be issued with either:
It’s worth noting that applications for the cultural certificate should be submitted no more than 21 days before the bulk of the film production starts.
The digital gaming tax credit must primarily be used in offsetting any liability for corporation tax that the company has for that particular accounting period. Where no corporation tax is due, or the credit is more than the CT liability itself, the remainder can be claimed by the company in cash.
If an interim certificate has been issued, companies then have 12 months to claim the digital gaming tax credit. Remember though, this means 12 months from the end of the accounting period during which the eligible costs were incurred.
Say a company’s year-end is 31st December 2022. Where this is the case, a claim relating to relevant costs incurred from the 1st January 2022 to 31st December 2022 must be submitted by 31st December 2023.
Final claims can be made by companies that hold a final certificate. However, any amounts received under an interim certificate must be deducted, with the overall credit amounting to no more than €8,000,000.
Companies looking to claim the digital gaming tax credit should keep detailed, up-to-date records of their activities and expenditure. Revenue will expect to see this evidence and are likely to scrutinise it in detail.
When making your application, it’s really important to focus on how the costs your company has incurred relate to the development and testing of your game specifically. Further guidance is expected to be issued by Revenue shortly.
Sometimes a company won’t be able to claim the digital gaming tax credit, for example if:
Based in Dublin, the Myriad Associates team are experts in all things R&D tax and funding. So if your gaming company is Ireland-based and has engaged in any kind of innovative projects recently, it’s well worth seeing if you could apply for this relief (plus R&D Tax Credits too!)
Don’t forget, there’s also a huge range of R&D grants on offer as well which, with our help, could make all the difference to your company’s innovation plans.