THE EUROPEAN COMMISSION (EC) has given approval to UK plans to grant tax relief to video game developers.
The plans were announced in 2012 by the chancellor George Osborne. They had the backing of industry, naturally, and now they have the backing of the EC. The EC began an investigation of the idea in 2013, and late last week it decided that the plans are fair enough.
The EC wanted to decide whether the tax relief is in line with its policies and state aid rules and if it might be viewed as discriminatory.
Commission VP in charge of competition policy Joaquín Almunia said early concerns have been seen off, adding that the EC is happy that needy firms will benefit from the plans.
"Our initial doubts have been dispelled," he said. "The proposed aid for video games is indeed focusing on a small number of distinctive, culturally British games which have increasing difficulties to find private financing."
The EC said that just a quarter of UK games developers will benefit from tax aid, adding that without that support the industry would suffer.
"The video games tax relief will provide an incentive to video game developers to produce games meeting certain cultural criteria," it explained,
"The UK demonstrated in particular that the proposed cultural test ensures that the aid supports only games that are of cultural value... Without this support the number of new culturally British games is likely to decline considerably."
Tiga, the UK videogames industry body, has welcomed the introduction of support in the market and said that the relief adds up to £188m in added investment over the next five years.
"This is a superb decision by the EU Commission and magnificent news for the UK video games industry," said Tiga CEO Dr Richard Wilson. "Our research has demonstrated tax relief for the UK video game sector will increase employment, drive innovation and secure additional investment in the industry."
Also welcoming in its statement was Ukie, the UK interactive entertainment outfit.
"This is a huge boost to the UK games and interactive entertainment sector and the start of a great new era of games production in the UK," said Ukie CEO Dr Jo Twist.
"We are delighted the European Commission recognised the clear market failure for the production of games with a British and European flavour, using UK-based creative and highly skilled talent." µ
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