Digital Gaming Tax Credit

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The Digital Gaming Tax Credit offers companies developing digital games a tax credit of up to 32% per qualifying game. 

This credit can be claimed by the company on an annual basis or at the conclusion of the game development effort. This new tax credit regime is subject to European state aid approval prior to coming into effect. 

Before assessing eligibility, it’s important to determine whether your company is developing a qualifying digital game. A qualifying game is one that integrates digital technology, can be published on an electronic medium, and is interactive or built on interactive software. It must also incorporate at least three key elements — design, production, and testing. Expenditure on the design, production, and testing of the digital game should be considered allowable for the purposes of this tax credit. This credit is available to companies that are resident in Ireland, or to those resident in the EEA who operate in Ireland through a branch or agency.

Qualifying conditions

Before assessing eligibility, it’s important to determine whether your company is developing a qualifying digital game. A qualifying game is one that integrates digital technology, can be published on an electronic medium, and is interactive or built on interactive software. It must also incorporate at least three key elements — design, production, and testing. Expenditure on the design, production, and testing of the digital game should be considered allowable for the purposes of this tax credit. This credit is available to companies that are resident in Ireland, or to those resident in the EEA who operate in Ireland through a branch or agency.

Exclusions
A company cannot avail of this tax credit if it has not been issued with an interim or final certificate, if the interim certificate has expired and no final certificate has been issued, if the digital game being developed is primarily for advertising or gambling purposes, or if the company is, or is part of, an undertaking regarded as being in difficulty.

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Certification process

Before a company can avail of the Digital Gaming Tax Credit, it must obtain certification from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media. In deciding whether to grant certification, the Minister will consider factors such as the proportion of activity carried out in Ireland or the EEA, the level of Irish or EEA participation, and the cultural relevance of the game’s setting, characters, language, or storyline. Additional considerations include the use of Irish or European materials or music, educational content for children, themes of diversity and equality, and how the game promotes environmental sustainability or minimises climate impact. Two types of certification can be issued: an interim certificate for games still in development, and a final certificate once development is complete. While the application timeline has yet to be confirmed, it is expected to follow a process similar to the Section 481 Film Corporation Tax Credit, where a cultural certificate must be filed no later than 21 days before the bulk of production begins.
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Claiming the credit

Where a company has been issued with an interim certificate, the credit can be claimed within twelve months of the end of the accounting period in which the expenditure is incurred.For example, if a company’s year-end is 31 December 2024, a claim relating to expenditure from 1 January 2024 to 31 December 2024 must be made by 31 December 2025.If a company has been issued with a final certificate, it may then make a final claim, less any amounts already received under the interim certificate, provided the overall credit does not exceed €8,000,000.The Digital Gaming Tax Credit must first be used to offset any corporation tax liability for that accounting period. Where there is no such liability, or if the credit exceeds the amount due, the balance may be claimed as a cash refund.

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Documentation requirements

When availing of the Digital Gaming Tax Credit, companies must maintain sufficient records of their expenditure and activities to enable the Revenue Commissioners to validate their claim. Documentation should demonstrate how expenditure relates to the design, production, and testing of the game, and the stage of development at which the expenditure was incurred. In line with other similar tax credit regimes, Revenue is expected to issue further guidance outlining its expectations regarding the nature and extent of documentation required.

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Derek Henry

Partner & Head of Tax, BDO Dublin
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