Irish digital gaming tax credit gains EU approval

Full approval has now been given by the European Commission for the new digital gaming tax credit scheme to launch in Ireland. This long awaited €20 million tax credit scheme is designed to support the development of digital games specifically promoting Irish or European culture.

What is the digital gaming tax credit?

The concept of a digital gaming tax credit was first announced in the 2021 Budget. It’s essentially all about encouraging projects that enhance the European digital audiovisual sector whilst bringing about a more varied cultural landscape.

This lucrative new tax relief offers companies that are developing digital games a tax credit of up to 32% per eligible game. It can either be claimed annually, or once the game’s development has been completed.

Which companies can claim the digital gaming tax credit?

Any company that is resident in Ireland can claim the digital gaming tax credit. Alternatively, a claim can still be made if the company is based in the EEA and operates in Ireland via an agency or branch.

What type of game will qualify for the digital gaming tax credit?

To be eligible, the game must integrate some form of digital technology and be published on an electronic medium, for example a games console. It must also be interactive (or as least incorporate three or more of the below):

• Sound
• Text
• Animated images
• Still images

The credit can also be claimed in relation to money spent on the development, production and testing of the game.

Remember: You’ll need to get the right certification

So your company can claim the digital gaming tax credit, you need to get certification from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media. You’ll be judged on things like:

• How much of the development work was carried out in Ireland or the EEA
• The amount of Irish or European culture that’s weaved into the game. So this would be things like language, characters, setting etc, as well as the storyline
• What proportion of the development work was completed by Irish or EEA nationals
• How educational the content of the game is. For example, where a game is intended for children, to what extent have themes of diversity and equality been addressed
• Does the game consider topics like climate change and eco-sustainability
• Whether the music and sound effects used in the game were created in Ireland or the EEA

What are the different types of certification?

Companies claiming the digital gaming tax credit will be issued with either:

• An interim certificate: This is for companies who are still creating their game and have therefore not yet brought it to market.
• A final certificate: Final certificates are given to companies who have finished developing their game.

It’s worth noting that applications for the cultural certificate should be submitted no more than 21 days before the bulk of the film production starts.

How can Irish companies use the credit?

The digital gaming tax credit must primarily be used in offsetting any liability for corporation tax that the company has for that particular accounting period. Where no corporation tax is due, or the credit is more than the CT liability itself, the remainder can be claimed by the company in cash.

If an interim certificate has been issued, companies then have 12 months to claim the digital gaming tax credit. Remember though, this means 12 months from the end of the accounting period during which the eligible costs were incurred.

An example:

Say a company’s year-end is 31st December 2022. Where this is the case, a claim relating to relevant costs incurred from the 1st January 2022 to 31st December 2022 must be submitted by 31st December 2023.

Final claims can be made by companies that hold a final certificate. However, any amounts received under an interim certificate must be deducted, with the overall credit amounting to no more than €8,000,000.

What documentation is needed to claim the digital gaming tax credit?

Companies looking to claim the digital gaming tax credit should keep detailed, up-to-date records of their activities and expenditure. Revenue will expect to see this evidence and are likely to scrutinise it in detail.

When making your application, it’s really important to focus on how the costs your company has incurred relate to the development and testing of your game specifically. Further guidance is expected to be issued by Revenue shortly.

Are there any times when companies are not eligible for the digital gaming tax credit?

Sometimes a company won’t be able to claim the digital gaming tax credit, for example if:

• The digital game being developed is for the purposes of gambling, marketing or advertising
• They haven’t received either an interim or final certificate
• They do hold an interim certificate but it has expired and a final certificate hasn’t been issued.

Contact us

Based in Dublin, the Myriad Associates team are experts in all things R&D tax and funding. So if your gaming company is Ireland-based and has engaged in any kind of innovative projects recently, it’s well worth seeing if you could apply for this relief (plus R&D Tax Credits too!)

Don’t forget, there’s also a huge range of R&D grants on offer as well which, with our help, could make all the difference to your company’s innovation plans.

Using an R&D tax consultancy always makes sense. Feel free to get in touch using our contact page, or call +353 1 566 2001.