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Maximise your Irish Digital Games Tax Credit claim. Learn which development costs qualify for 32% relief and avoid the mistakes that trigger rejections.
Understanding what costs qualify for Ireland's Digital Games Tax Credit isn't just about compliance, it's about maximising your claim while ensuring you meet all regulatory requirements. With potential relief of up to €8 million per game, getting your cost classification right from day one is crucial.
The stakes are high. Incorrectly categorised costs can lead to rejected claims, delayed payments, or even clawbacks of relief already received. But with proper planning and documentation, Irish game developers can leverage this relief to fund innovation, hire talent, and compete on the global stage.
The relief covers costs incurred during three specific stages of game development:
Design Stage – Following approval of the initial concept, this is where the detailed design work begins. You're fleshing out mechanics, creating design documents, and planning the architecture of your game.
Production Stage – The heavy lifting happens here. This is where your team builds the game, creates assets, writes code, and brings your design to life.
Testing Stage – Quality assurance before release. This includes bug testing, balance testing, and ensuring the game meets quality standards before completion.
Two major phases of game development explicitly don’t qualify for relief:
Initial Concept Design Costs – The early-stage work where you're deciding on gameplay types, target audiences, story concepts, and assessing feasibility doesn't qualify. This is the period before you've committed to developing a specific game. If you're preparing a pitch or considering whether an idea is feasible, you're still in concept phase.
Post-Completion Debugging and Maintenance – Once your game is released to the public or delivered to a commissioning party, any subsequent bug fixes, patches, updates, or live service maintenance can’t be claimed. The date of completion marks a hard line in the sand.
Employee costs form the backbone of most claims, as they typically represent the largest portion of development expenditure.
What qualifies:
What doesn't qualify:
Time apportionment is essential. If you have employees working on multiple projects, you must calculate the proportion of their time spent on the qualifying game.
For example, if a developer works 60% of their time on your qualifying game and 40% on other projects, only 60% of their employment costs can be included in your claim. You'll need robust time-tracking systems to demonstrate this split to Revenue.
Remuneration must also be in line with your company's usual policy and industry rates. Inflated salaries will be rejected by Revenue.
Capital expenditure requires careful calculation, as you can’t simply claim the full purchase price of equipment.
Only the depreciation or capital allowances arising during the development period can be claimed. Revenue accepts calculation at 12.5% per annum as reasonable for most equipment.
This rule reflects the reality that development equipment is typically used across multiple projects over its useful life.
What qualifies:
What doesn't qualify:
For example, your studio purchases €100,000 in IT equipment at the start of a two-year development cycle. Using the 12.5% annual depreciation rate, you can claim €25,000 as qualifying expenditure (€12,500 per year for two years), even though the equipment still has significant value and utility after the game's completion.
Rental and leasing costs offer more straightforward calculations than capital purchases, but still require careful apportionment.
What qualifies:
Costs must correspond to the actual usage rate during the development period.
This category covers the digital tools and assets essential to modern game development.
What qualifies:
Items must be "specific and key" to the game's development. Generic office software or tools used primarily for administration won't qualify.
Outsourcing can accelerate development, but sub-contractor costs come with specific restrictions.
What qualifies:
There is a hard limit of €2 million per game. Sub-contractor payments exceeding €2 million can’t be claimed, regardless of whether they meet other criteria.
The sub-contractor must be based in Ireland or another EEA state to qualify as "eligible expenditure." Non-EEA sub-contractors can count toward "qualifying expenditure" but not "eligible expenditure," which affects your final calculation.
Please note, you can’t outsource management and general administration, and your development company must always retain control of the project. Detailed contracts and invoices are essential. Revenue will scrutinise sub-contractor arrangements, particularly those with connected parties.
This distinction is crucial because your relief is calculated as 32% of the lower of eligible expenditure or 80% of qualifying expenditure (both subject to a €25 million cap).
Qualifying Expenditure: All allowable costs incurred during the design, production, and testing stages, regardless of where in the world they were incurred. There's no geographic restriction on your own employee costs.
Eligible Expenditure: Only the portion of qualifying expenditure that was incurred in Ireland or another EEA state.
For example:
Company A has a total qualifying expenditure of €10 million, but €3 million was spent on a US-based contractor. Their eligible expenditure is only €7 million (the Ireland/EEA portion). Their relief is calculated on €7 million, not €10 million, as this is the lower of the eligible expenditure or 80% of the qualifying expenditure.
Company B has a total qualifying expenditure of €10 million, but €1 million was spent on a US-based contractor. Their eligible expenditure is €9 million, but their relief is calculated on 80% of their qualifying expenditure (€8 million), as this is the lower of the two amounts.
Company C has a total qualifying expenditure of €35 million. Even with €30 million in EEA/UK costs, the company is still limited to claiming €25 million, as there is a limit to every claim.
Expansions, new maps, additional characters, or cosmetic options don't qualify as standalone digital games. DLC requires an existing game to function, so it fails the fundamental definition of a digital game under the legislation.
If you're developing new content for an existing game, it won't qualify for relief, even if it represents substantial development work.
Releasing your game on additional platforms doesn't create a new qualifying game. Only the original development qualifies for relief.
If you developed your game for PlayStation and later port it to Xbox or Switch, the porting costs don't qualify. The relief applies to creating the game, not adapting it for different platforms.
The pre-development phase is explicitly excluded:
The date you move from concept to qualifying development stages is critical. Evidence may include contracts signed with publishers or commissioning agents or budget allocation and staffing decisions or detailed design documents showing commitment to specific game mechanics and features. For commissioned games, the date you enter into a formal agreement typically marks the end of the concept phase.
Once your game is released to the public or delivered to the commissioning party, the clock stops. Bug fixes, patches, updates and live service maintenance are not eligible development.
The completion date is crucial for multiple reasons. It determines when qualifying costs end, triggers the six-month window for applying for final certification, and affects the timeline for your final claim. Document the completion date clearly in your records.
Double-dipping is explicitly prohibited. You can’t claim the digital games tax credit on costs already funded by any state aid from the Irish government or other public sector support.
This requirement ensures compliance with EU state aid rules. Maintain clear records showing which costs were funded by grants and which by other sources.
Commercial activities surrounding your game don't qualify:
The relief focuses exclusively on development. Once your game is ready for market, costs shift from qualifying development to non-qualifying commercialisation.
Revenue has explicit authority to reject unreasonable expenditure. This applies to:
If you're working with related entities, ensure pricing matches what you'd pay unrelated third parties for equivalent services.
You can’t claim multiple Irish tax reliefs on the same costs. For example, you can’t claim R&D tax credit on the same expenditure.
If your game has elements that might qualify under multiple schemes, categorise expenditure clearly and only claim each cost once. This requires careful planning if you're developing games with substantial R&D components.
To claim the final digital games tax credit, your total qualifying expenditure must be at least €100,000.
Note: This minimum applies only to the final claim. Interim claims can be made with expenditure below this threshold, but if your completed game doesn't reach €100,000 in qualifying costs, you can’t claim the final credit and any interim relief will be subject to clawback.
Add up all five categories of qualifying costs, ensuring proper time and usage apportionment for all shared resources.
Apportioning your staff time, equipment, consumables, software and sub-contractors (if necessary) is critical, as is evidence of your methodology. You’ll need to be able to demonstrate where you got your numbers from, in case Revenue asks for more information.
From your qualifying expenditure, identify which costs were incurred in Ireland or the EEA:
Revenue has a very clear approach to claiming the Digital Games Tax Credit. You can claim 32% of the lowest of:
Worked example:
The lowest figure is €12 million, so: Relief = 32% × €12 million = €3.84 million
With potential relief of up to €8 million per game, the financial impact of proper cost tracking and categorisation can’t be overstated.
The relief is generous, but the requirements are specific. Companies that invest in proper cost tracking systems, maintain comprehensive documentation, and understand the qualifying criteria will maximise their claims and avoid costly mistakes.
If you want to discuss your Digital Games Tax Credit claim, get in touch with Myriad’s experts.
Maximise your Irish Digital Games Tax Credit claim. Learn which development costs qualify for 32% relief and avoid the mistakes that trigger rejections.
Learn how to correctly claim staff costs for Ireland’s R&D tax credits, what employment expenses qualify, time-tracking rules, and compliance tips.
Irish companies can claim R&D tax credits for work in the EEA and UK. Learn the rules for foreign staff, contractors, and international R&D activities.
Please contact us to discuss how working with Myriad can maximise and secure R&D funding opportunities for your business.
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