The UK government's long awaited tax relief for the video
games sector has stalled as the European Commission questions
whether state aid in this sector is necessary.
The proposed relief for this sector, which sits alongside the
proposed legislation for high-end television programmes and
animation productions, was introduced by the Government in the
Finance Bill 2013 and is modelled on the existing relief for film.
In order to satisfy EU requirements, the reliefs already
incorporate a strict cultural content and contribution test to
ensure that only products that are "culturally British"
qualify.
However, while the proposed reliefs for high-end television and
animation productions received state aid approval by the Commission
on 25 March 2013 and were therefore effective from 1 April 2013,
the Commission said on 16 April 2013 that it considers that there
is no obvious market failure in the video games sector and that
games fitting the cultural criteria are already being developed
with no need for state aid. The Commission is also concerned to
avoid a subsidy race between countries in the European Union. As a
result, the Commission has opened an in-depth investigation, which
can typically take around a year. In the meantime, on 22 April
2013, the UK Government published revised draft regulations setting
out the cultural tests which address some of the Commission's
concerns.
It is worth noting that in 2006 the Commission initially rejected
a similar scheme by France, but then approved it after France
modified the French "cultural content" test.
http://europa.eu/rapid/press-release_IP-13-333_en.htm
(This article is to be published later this month in Bristow's regular EU update column featured in [2013] 29 Computer Law and Security Review Issue 3.)
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