The European Commission has opened an ‘in-depth investigation’ into the video games tax relief included in the UK’s Finance Bill.
The measure, which is subject to state aid approval, is intended to provide an incentive to video games developers to produce games meeting certain cultural criteria, the EC said in a press release.
‘However, the commission considers that there is no obvious market failure in this dynamic and growing sector and that such games are produced even without state aid. Consequently, at this stage, the commission doubts that the aid is necessary.’
Joaquín Almunia, commission vice-president in charge of competition policy, said: ‘The market for developing video games is dynamic and commercially promising. It is not clear whether the taxpayer should be subsidising this activity. Such subsidies could even distort competition.’
HM Treasury declared last June that the UK’s creative industries would benefit from ‘tax reliefs that are among the most generous in the world’.
It said: ‘The UK is a world leader at production in these sectors and the government is keen to provide the necessary support to maintain this status. Without government support, there is a risk that underinvestment will lead to valuable productions moving overseas or not happening at all.’
Comments are invited within a month of the publication of today's decision in the EU Official Journal. The opening of an in-depth investigation does not prejudge its outcome, the EC added. ‘It gives the UK and other interested parties the opportunity to comment.’
HMRC announced in February that its creative industries team, based in Manchester, would accept claims from 1 April.
The European Commission has opened an ‘in-depth investigation’ into the video games tax relief included in the UK’s Finance Bill.
The measure, which is subject to state aid approval, is intended to provide an incentive to video games developers to produce games meeting certain cultural criteria, the EC said in a press release.
‘However, the commission considers that there is no obvious market failure in this dynamic and growing sector and that such games are produced even without state aid. Consequently, at this stage, the commission doubts that the aid is necessary.’
Joaquín Almunia, commission vice-president in charge of competition policy, said: ‘The market for developing video games is dynamic and commercially promising. It is not clear whether the taxpayer should be subsidising this activity. Such subsidies could even distort competition.’
HM Treasury declared last June that the UK’s creative industries would benefit from ‘tax reliefs that are among the most generous in the world’.
It said: ‘The UK is a world leader at production in these sectors and the government is keen to provide the necessary support to maintain this status. Without government support, there is a risk that underinvestment will lead to valuable productions moving overseas or not happening at all.’
Comments are invited within a month of the publication of today's decision in the EU Official Journal. The opening of an in-depth investigation does not prejudge its outcome, the EC added. ‘It gives the UK and other interested parties the opportunity to comment.’
HMRC announced in February that its creative industries team, based in Manchester, would accept claims from 1 April.
