UK Government and ELSPA speak out on French tax breaks

Many in the UK games industry are hoping that the news of the EC passing France’s proposal for studio tax credits will pave the way for similar legislation in the UK – but both the Government and publishing body ELSPA have warned against the possible complications of such a move in Britain.

Well-known industry figures such as TIGA’s Fred Hasson, SCi/Eidos’ Jane Cavanagh and EA’s Matthew Jeffrey have led the calls for similar incentives to be introduced into the UK throughout this year.

But, according to ELSPA, these ‘French-style’ tax credits could have knock-on effects for regulation and classification thanks to the stipulation regarding ‘cultural output’.

The issue of tax breaks as the situation currently stands is that they may have serious implications for the EU classification of the sector and regulatory issues,” an ELSPA spokesperson told MCV. However, of course it would be an ideal situation if one could look for a format in which tax breaks could be granted – but that the regulatory and classification areas were not affected.”

A spokesperson for the Government’s Department for Culture, Media and Sport commented: What works for the French games industry may not work for the UK.

We will study the detail of the European ruling and consider what its impact will be for the French, UK and wider European games industries.”

Despite ELSPA’s reticence, many in the industry are calling for tax credits similar to those introduced in France to be implemented in the UK. MD of Mastertronic Andy Payne said: To encourage our creative industries is a must and now that the French have decided to support their creative industries, the rest of the EU must follow. The ‘brain drain’ to Canada and other territories must be stemmed.”

UK MD of Ubisoft Rob Cooper added: I would like to see a greater level of support and understanding from the UK Government, to help the development talent here compete with the rest of the world and stop the move abroad that seems to be happening too much.”

And Kuju boss Ian Baverstock commented: The UK definitely has to consider similar credits now. Under EU law there is a limit to the power of the UK Government to directly interfere in commercial markets.But now that the precedent is there for France, the Government has to look at the impact on UK developers of this further distortion of the development market which is already severely distorted by the Canadian tax breaks.”