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Push for gaming tax relief to win next-level investment

As Government fine-tunes measure, industry hopes for ‘upscaling’ to attract top firms

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Ireland is already home to many global games producers, including the makers of popular titles such as Fifa and Call of Duty. Photo: Lisa F Young

Ireland is already home to many global games producers, including the makers of popular titles such as Fifa and Call of Duty. Photo: Lisa F Young

Video-games companies are looking more towards Ireland thanks to tax relief. Photo: Dominic Lipinski/PA Wire

Video-games companies are looking more towards Ireland thanks to tax relief. Photo: Dominic Lipinski/PA Wire

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Ireland is already home to many global games producers, including the makers of popular titles such as Fifa and Call of Duty. Photo: Lisa F Young

Hopes are high that an “upscaling” of a tax relief for video games – similar to the well-known film and TV credit – will result in an influx of new investment.

The film credit – a 32pc tax deduction known as Section 481 and in place since 1987 – has been responsible for luring big-budget productions, such as Braveheart, to Ireland.

The Department of Finance is still fine-tuning the credit to ensure it complies with EU state-aid rules. To qualify, producers will have to prove the games are “culturally relevant” to Ireland and Europe, a test that will be conducted by the Culture Minister.

Patrick O’Donnell, video games analyst with stockbrokers Goodbody, said the digital games relief in place – known as Section 481a – could bring in studios such as the UK’s Sumo Digital.

It could also attract new investment from top firms such as Singapore’s Virtuos, which already runs one studio, Black Shamrock, in Dublin.

Virtuos recently announced its expansion into Malaysia, France and Canada, all of which have tax credits in place for games producers.

“It could be the starting point for building some level of consolidation. The Irish market now is quite nascent,” Mr O’Donnell said.

“I think Sumo are definitely one that stand out to me as a potential candidate. They have added into other territories before on this basis. And as that nucleus forms, and bigger studios come here, you tend to see a waterfall effect.”

Many global games producers, including Fifa maker EA and Call of Duty producer Activision Blizzard, have already set up shop here, but largely to do back-end work such as legal, customer service or testing, which would not qualify for the credit.

The Section 481a relief allows a 32pc corporation tax credit on 80pc of the costs of producing a game, to a maximum of €25m.

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“That could be an issue for really big games, so it might mean the size of publishers that come here could be more mid-sized developers, rather than your EAs and Activisions,” Mr O’Donnell said.

“It depends a lot, over time, on how the Government react to the momentum with regard to some of the companies that are coming in here – do they scale it up?”

The Government is certainly hoping that the current credit will lead to new investment.

It has ploughed €1.9m into a digital gaming hub in Strandhill, Co Sligo. And IDA-supported Riot Games, maker of League of Legends, has recently invested €18.5m in a new remote e-sports broadcasting centre in Swords, Co Dublin.

Meanwhile, film producers are nervous the Government has yet to commit to renewing its 32pc film credit, which has to be looked at every five years under EU state-aid rules.

Screen Producers Ireland board member James Hickey said he was “optimistic” the relief would be rolled over and that the industry will be granted a long-awaited “Netflix levy”.

A recent study by consultants Indecon found a 3pc content levy could net the industry €25m a year, leveraging up to €100m in production activity for Irish-focused content.

Twelve European Union countries already impose financial obligations on
television groups to produce local content.


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