UK game tax breaks approved by European Union

The European Commission lifted its block on tax incentives for the U.K. games industry, U.K. Interactive Entertainment confirmed to Polygon today.

This comes following a seven year campaign to provide tax relief to British game studios from U.K. trade association TIGA. The lift on tax incentives results in roughly £188 million in additional investments for U.K. games businesses between now and 2019.

These proposed tax breaks were under investigation by the European Commission earlier last year. At the time, the Commission made its doubts public over whether Games Tax Relief would be necessary, stating "there is no obvious market failure in this dynamic and growing sector and that such games are produced even without state aid." The organization also underlined concerns over whether the program could potentially cause "undue distortions of competition" in the U.K. games industry.

TIGA later submitted extensive evidence based on a coordination of efforts with the U.K. government and partners in the European Games Developers' Federation to persuade the Commission otherwise.

"TIGA responded to the EU's formal investigation into GTR, and built a compelling case which demonstrated that: video games are cultural products similar to other audio-visual creations and so merit support; that the UK video game industry is competing on an un-level playing field because our key global competitors already benefit from tax relief or other forms of government support; that GTR is necessary and proportionate in design, and that it achieves all of these results without distorting trade and competition within the EU," said TIGA CEO Dr. Richard Wilson in a prepared statement.

"Our research has demonstrated tax relief for the UK video game sector will increase employment, drive innovation and secure additional investment in the industry. Specifically, TIGA's research has shown GTR should create and/or protect 4,661 direct and indirect jobs; encourage approximately £188 million additional investment expenditure by UK studios; generate £172 million in new and protected tax receipts to HM Treasury, and all at a cost of just £96 million over five years."

TIGA was developed to represent the U.K. industry and aid both developers and digital publishers in building studios, saving money and gaining access to professional business advice.

UKIE will begin introducing a number of presentations designed to provide game developers with more information on how games industry tax relief will affect them. You can get more information for these sessions right here.