Digital Games Tax Credit

On 12th October 2021 the Irish Government announced the introduction of a Digital Games Tax Credit, i.e. a refundable Corporation Tax Credit available to digital games development companies.

On 21^st October, Section 33 of the Finance Bill introduced section 481A TCA 1997 in relation to the new tax credit for the digital gaming sector which provides relief at a rate of 32% of the qualifying expenditure incurred in the development of digital games (i.e. the design, production and testing of a digital game) up to €25 million.

In other words, the credit of 32% will be on the lower of:

1. 80% of the qualifying expenditure per project or
2. €25 million per project

In order to qualify for the relief, the minimum expenditure per project is €100,000.

The digital gaming corporation tax credit will be available up to 31st December 2025.  

This tax credit is available to companies who are resident in Ireland, or who are EEA resident and operate in Ireland through a branch or an agency.

To qualify for this tax credit, the digital game must be issued with one of two types of Certificate from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media:

1. An interim certificate which is issued to companies who are in the process of developing their game or
2. A final certificate which is issued to companies who have completed the development of their game.

A digital games development company may not make a claim for the tax credit unless it has been issued with either an interim or a final certificate.

If a company has been issued with an interim certificate, it can claim the tax credit within twelve months of the end of the accounting period in which the qualifying expenditure is incurred.

Relief will not be available for digital games produced mainly for the purposes of advertising or gambling.

A digital game development company will be required to sign an undertaking in respect of “quality employment” which is similar to the requirements contained in section 481 TCA 1997 for tax relief for investment in films.

A claimant company will not be allowed to qualify for any additional tax relief under Section 481 Film Relief or the R&D tax credit.

As the credit will require EU state aid approval, it is to be introduced subject to a commencement order.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.