Digital Games Tax Credit

Depending on your accounting period, you will receive the credit as a reduction in your Corporation Tax bill, an overpayment of tax or as a cash credit.

For accounting periods beginning before 1 January 2024, the credit reduces your CT liability. If there is an excess (i.e., you have more DGTC than CT liability), Revenue will pay the remainder as cash. You must amend your CT1

For accounting periods beginning on or after 1 April 2024, you must specify how you want to receive the credit. You can receive it as an overpayment of tax (which can then be used to offset any tax liabilities), or as a cash credit, or even a bit of both. You can submit this claim either in an original or amended CT1.

Companies 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 31 December 2022; a claim relating to relevant costs incurred in this period must be submitted by the 31 of 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.

Some companies may not be eligible to claim the DGTC, even if they have a qualifying game:

• Companies without an interim or final certificate, or an expired interim certificate.
• Companies in or part of an undertaking in difficulty (i.e., companies that will go out of business in the short to medium term without state intervention).
• Companies or owners of the company that are not tax compliant.
• Claims with qualifying expenditure of less than €100,000.
• Companies subject to an outstanding recovery order in relation to State aid.
• Companies that have not been carrying on a trade of developing digital games for at least 12 months prior to making a claim.

To be eligible, the game must integrate digital technology and be published on an electronic medium, for example, a games console. It must incorporate at least three or more of the below:

• Sound.
• Text.
• Animated images.
• Still images.

It must also be interactive, enabling the player to control elements of the game or adapt elements of the game.

It must also be developed on a commercial basis, understanding that it will be released to public with a view of making a profit.

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

• Sound.
• Text.
• Animated images.
• Still images.

The credit can also be claimed for money spent on the game's development, production, and testing.

The game must not be intended for advertising, promotional or gambling purposes.

The game cannot be an “exempted work” per the Video Recordings Act 1989:

• Incites or encourages viewers/players to commit crimes or indicates ways to do so without detection.
• Stirs up hatred against a group of people based on race, colour, nationality, religion, ethnic or national origins, membership of the travelling community, or sexual orientation.
• Seeks to corrupt or deprave viewers/players.
• Depicts acts of gross violence or cruelty against people or animals.

The restriction on advertising or promotional purposes is designed to exclude games primarily created as advertisements or promotional tools. For instance, a free video game developed specifically to promote a film would not qualify for DGTC.

However, this restriction does not restrict games from supporting adverts or promotions within them. This is common, particularly for mobile apps with a free, ad-supported version alongside a paid, ad-free alternative.

The rule also does not disqualify games based on existing intellectual property. For example, a video game based on a television series would still be eligible as long as it was not produced solely to advertise the series but rather to capitalise on an established and popular franchise.

To claim the digital gaming tax credit, your company must get certification from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media. This is referred to as the Cultural Test.

You’ll be judged on things like:

• How much development work was carried out in Ireland or the EEA.
• The amount of Irish or European culture that’s weaved into the game (e.g., language, characters, setting, and the storyline)
• What proportion of the development work was completed by Irish or EEA nationals.
• How educational the content of the game is (e.g., themes of diversity and equality)
• How the game considers topics like climate change and eco-sustainability.
• Whether the music and sound effects used in the game were created in Ireland or the EEA.

You can apply for either an interim certificate or a final certificate, depending on if your game is completed.

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

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

Interim certificates allow companies to claim the DGTC before the game is completed and therefore access the cash flow benefits while still developing.

You can claim of the design, production and testing of a digital game.

You can only claim for costs incurred from 22 November 2022 (the date that the DGTC came into effect). Your development is considered as beginning on this date.

The key to when core costs can be claimed is knowing when the project was “green-lit”. Initial concept design is usually undertaken to determine whether the video game is commercially feasible. Any expenditure in this stage is speculative in nature. 

Once it is clear that the game development is going ahead, expenditure can be claimed. Some comapnies may have very little conceptual development before proceeding with production, and some may spend more time assessing the commercial viability of a game.

Though game development may not always occur sequentially, claimants need to make an effort to split out conceptual development, production and post-production costs. You must identify which stage of development an item of expenditure contributes to, then determine how much is attributable to that stage.

Game and level designers may mostly be involved in conceptual development but may have some input at the development stages. Similarly, programmers and artists will be primarily involved at the production stage but may still be involved in pre- and post-production for feasibility analysis or debugging.

You cannot claim for development costs (i.e., costs from before the game was ‘green-lit’).

You also cannot claim for debugging/maintenance costs after the game is completed.

There is also a restriction on the amount of subcontractor costs you can claim; you may only claim a maximum of €2,000,000.

Your claim must not exceed €25,000,000 in costs.