EU approves Irish €20m state aid scheme for cultural video games

Ireland has been given approval by the EU for a new €20 million scheme that will support the development of cultural video games.

Aimed at encouraging projects that contribute to a varied cultural landscape, the scheme will be open to digital games development companies, with up to €8 million in tax credits per beneficiary. Beneficiaries must be liable for taxation in Ireland.

A hybrid of the existing research and development tax credit and film tax credit schemes, the tax incentive is designed to attract more games companies to Ireland and nurture growth in the lucrative industry.

Under the scheme, which will run until December 31st, 2025, the maximum amount of the tax credit will be equal to 32 per cent of eligible costs, expenditure must be incurred on the development of a digital game spent in the European Economic Area, and 80 per cent of total expenditure incurred on its development or €25 million, whichever is lowest.

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The commission said the scheme had been found to be “necessary and appropriate” to facilitate the development of cultural and educational video games, and would have a limited impact on competition.

The tax incentive was introduced in the Finance Act 2021 but required review and approval by the European Commission to ensure it did not fall foul of state aid laws. However, France and Germany, along with the UK before Brexit, had already implemented similar tax incentives.

Last month the commission approved the Government’s €200 million aid scheme for businesses affected by the war in Ukraine.