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Ireland Debuts New Video Game Development Tax Credit

Posted on Nov. 28, 2022

Ireland has launched a new video game industry tax credit designed to bolster development of the country’s media production and audiovisual sector.

The digital games tax credit will amount to 32 percent of development companies' eligible expenditures, up to a maximum of €25 million per project, with a minimum spend requirement of €100,000. Finance Minister Paschal Donohoe formally signed the regulation for the credit November 21 at the Guinness Enterprise Centre in Dublin, according to a Department of Finance release.

“Ireland is already a world leader in other areas of the audiovisual sector including film, television and animation production,” said Donohoe in the release. “I believe that this credit will be instrumental in replicating such successes in the digital gaming sector. The introduction of this credit will ensure that Ireland is competitive in an industry that is estimated to be worth up to €260 billion.”

Relief for digital games was introduced in the Finance Act 2021 (in December 2021) and provided for under section 481A of the Taxes Consolidation Act of 1997, according to a Revenue spokesperson.

“The aim of the measure is to provide an incentive to digital games developers to produce digital games that contribute to the promotion and expression of Irish and European culture. The relief is a corporation tax credit, the beneficiaries of which are digital games development companies,” the spokesperson told Tax Notes.

The tax credit could not be introduced until the European Commission greenlit the scheme under state aid rules, which it did September 27 after assessing the measure and determining that it is permitted aid for promoting culture and heritage conservation.

Eligible video game development companies will be able to apply for an interim cultural certificate from the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media for a qualifying game. Certificate holders will be able to apply for remuneration under the credit starting January 1, 2023, according to the release. The scheme will run until December 31, 2025. The cultural test will require the game to satisfy a specified number of points in different areas of Irish and European culture, according to Revenue.

Eligibility rules require that the digital game be developed commercially for profit and public availability, be an exempted work under the Video Recordings Act 1989, and not be produced exclusively or mainly for gambling or advertising purposes, the Revenue spokesperson said. Digital games development companies taking advantage of the credit must be located in Ireland or a European Economic Area country.

Qualifying expenses, according to the spokesperson, include the costs of employees involved in design, production, and testing of the digital game; capital costs of assets used for digital game development; costs of renting or leasing equipment; costs of consumable items, software, copyrights, and other intellectual property rights; and subcontractor payments on digital game work not exceeding €2 million.

“The launch of the digital games tax credit is a huge moment for the Irish video games industry; it will welcome a new era of development creativity. This globally significant 32 percent credit will support our existing games development talent, plus attract major investment from overseas,” said Craig Stephens of Imirt, the Irish video games industry group, in the Department of Finance release.

Ireland is also home to a thriving audiovisual arts and animation sector, which had lobbied for the extension of the section 481 film tax credit that was set to expire December 31, 2024. Donohoe announced in Budget 2023 and in Finance Bill 2022 in October that the government would extend the 32 percent film tax credit — which is available to qualifying films, animation, TV dramas, and documentaries — to projects certified on or before December 31, 2028.

Subject Areas / Tax Topics
Industry Groups
Computers and software
Magazine Citation
Tax Notes Int'l, Dec. 5, 2022, p. 1293
108 Tax Notes Int'l 1293 (Dec. 5, 2022)
Institutional Authors
Tax Analysts
Tax Analysts Document Number
DOC 2022-37592
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