Ireland’s Digital Gaming Tax Credit

The Digital Gaming Tax Credit is a tax incentive which provides a refundable tax credit of up to 32% of eligible expenditure relating to the development of a qualifying digital game. It has been introduced in Ireland from 22 November 2022.

Overview of the Relief

The Digital Gaming Tax Credit offers a tax credit of up to 32% per Qualifying Digital Game developed by a Digital Games Development Company. A digital game is considered ‘qualifying’ once it has received final cultural certification from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media. The relief is available to Irish tax resident companies and is also available to EEA resident companies that operate in Ireland through a branch.

The tax credit can be claimed on an annual basis or once the digital game has been completed. The amount of the incentive available in relation to the development of a game is limited to 32% of the lower of:

• 80% of Qualifying Expenditure (specific expenditure relating to the development of the game), or
• The Eligible Expenditure (the portion of the qualifying expenditure in Ireland or an EEA country), or
• €25,000,000

There is a minimum qualifying expenditure requirement of €100,000 per game.

It is possible to apply for the incentive on an interim basis during the development of the game and the credit therefore has the potential to act as a key source of financing for the developer.

What games qualify for the relief?

 A digital game must be considered an Eligible Digital Game to qualify for the relief. This is a game that is:

• Developed with a view wholly or mainly to be made available to the public with a view to profit, and
• Is considered an ‘exempted work’ under the Video Recordings Act 1989, and
• Is not solely or mainly a medium for advertising or gambling

The Cultural Certificate

In order to qualify for the incentive, a cultural certificate must be applied for and issued by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media confirming the game as a Qualifying Digital Game.

As well as details of the game, information relating to financing, expenditure, employee and director details (for example) must be provided in the certificate application.

In addition, a points based ‘Cultural Test’ must be passed. The total points available are 35 with a minimum of 14 points required (40%) across four sections.

Certificates can be applied for on an interim basis during development however all qualifying claims require an application for a final Cultural Certificate following the completion of the game.

Claiming the Relief

Where an interim Cultural Certificate has been issued, companies can make a claim for the interim digital games corporation tax credit within 12 months of the end of the accounting period in which the expenditure arose. On Completion, a final cultural certificate must be applied for within 6 months. Applications must be made to the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media.

The relief is claimed by amending the corporation tax return for the Qualifying Period which will generally be the preceding corporation tax period for which the corporation tax filing deadline has passed.

Completion

A Qualifying Digital Game is considered ‘completed’ when –

• It has been released to the public, or
• When the game is provided to a third-party commissioner/publisher

‘Completion’ is an important concept for the purposes of the relief as after this point no further costs relating to the game will qualify for the incentive. For example, expenditure relating to post-completion patching or the development of additional downloadable content does not currently qualify for the credit. Completion is the starting point for the 6 month window where the final cultural certificate must be applied for.

This is an important consideration for games released on an ‘early access’ basis during development.

Exclusions from the Relief

The incentive is not available where:

• The company is not resident in Ireland or the EEA
• Any item of expenditure relating to a claim is inflated
• Relief has already been granted on the expenditure under i) the knowledge development box relief, ii) the research and development tax credit, or iii) film relief
• The Digital Games Development Company is considered an undertaking in difficulty
• Games development expenditure less than €100,000
• Development of the game commenced before 22 November 2022.

Saffery have extensive experience advising on Ireland’s creative sector tax reliefs. This includes assistance with claims for relief as well as tax planning to ensure relief claims are maximized.

If you would like to discuss how we can assist you please contact John Gleeson.