Mark O’Sullivan, Partner and Head of R&D Incentives, provides a summary of the key corporate tax reliefs relevant to the Digital Gaming tax credit that were referenced as part of the Budget 2022 announcement.
Announced initially as part of the Governments Budget speech last year, more details on the specifics of a new Digital Gaming tax credit were released as part of Budget 2022. The aim of the tax credit is to improve employment growth in Ireland in the sector, as we are currently lagging behind other jurisdictions.
The relief will be provided for at a rate of 32%, subject to a minimum spend of €100,000 and a spend cap of €25 million. It will be possible to make a reclaim for costs incurred on an annual basis, as opposed to on completion of the development effort, which should aid cash flow for companies availing of the regime as it will take the form of a refundable credit.
There will be a requirement that a cultural certificate from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media is attained for any games to be considered under this tax credit regime. It is further intended that the relief will not be available in respect of digital games produced mainly for the purpose of advertising or gambling.
In order to avoid a double claim under similar tax credit regimes, it will not be possible for a claimant to claim Film Relief or the Research and Development tax credit as well as the Digital Gaming tax credit.
In an effort to ensure that the credit not only incentivises employment, but also that this employment and associated working conditions are of a high quality, claimant companies must also sign an undertaking in respect of quality employment.
The exact date of implementation of this new tax credit is unknown at present as European State aid approval is required but we would expect that this should be done in 2022.
If you have any queries related to the information above, please contact Mark O’Sullivan at [email protected].