Game development tax incentives that were set up in France four years ago expired last month, and may not be reintroduced due to issues among French officials, according to media reports.
The European Commission approved plans to offer tax incentives for video games production in France at the end of 2007, with the decision also being welcomed across Europe.
However, this tax relief expired in January of this year, meaning that French studios are no longer able to benefit from the twenty percent refund on production costs.
Business website Develop is now reporting that the reintroduction of the tax breaks, due to be approved by Wouter Pieke, the European Commission Directorate General for Competition, is not certain, as discussions have not pushed forward as hoped.
Officials are discussing whether these tax benefits are distorting the market by giving an unfair advantage over other EU countries. If this tax exemption measure is not reinstated, developers in France will not longer be able to receive tax breaks.
In a letter written to Pieke, Heavy Rain developer Quantic Dream's co-CEO Guillaume de Fondaumiere reportedly said, "the abandonment of this flagship measure, which brings hope to a large number of European studios and which has demonstrated its effectiveness in France, would be an historic mistake."
Quantic Dream is based in Paris, France, and benefits from these tax breaks. "We would like to point out that this French measure has not caused any distortion in competition within the EU," he continued.
He also noted that Ubisoft has relocated part of its game production back to France since the tax benefits were put in place, "a step they clearly attributed to the video game tax credit," he suggested.
de Fondaumiere admitted that if these tax breaks are not reintroduced, his company will be looking to utilize similar initiatives in Canada.
A preposterous situation. If they want to be fair the EU nations should *all* agree to give tax breaks together, to stop the haemorrhage of talent from this region to Canada and other incentive-giving countries. At this rate I fear there may soon be precious little of the industry left here to tax.
I think these tax breaks are generally silly. Why would France give the game industry a break, and leave all other sectors alone? Generally, it doesn't favor the country: It slightly rises the amount of jobs created, but it more often than not, it costs more money in overhead, tax favors and stimulation funds. Even though the game industry might be blooming in those countries(Canada, I'm looking at you), it is on the expense of the state. It also creates an unstable industry for the country, that, as we can see here, just attracts people interested in the extra revenue, holding jobs hostage for more money. It just doesn't benefit the country, like proper education or incubators. The government is just paying a part of the salaries, and that's just silly in my opinion. If the government wants to stimulate innovation, do it through more precise measures, like innovation funds or better schooling. Maybe then you will get companies with some love for the countries they've got the chance to grow in, which will benefit the entire country with fair taxes over the industry.
"Even though the game industry might be blooming in those countries(Canada, I'm looking at you), it is on the expense of the state."
So? When the economy is crap that's when the state is supposed to invest it it. And with the size of the game industry in Quebec, I bet it's in the black for them by now ... they probably collect more in taxes than they pay out.
France is particularly vulnerable because of the cultural compatibility. The Quebec government is very happy to have French companies move to Quebec, in games and in other fields.
I don't know if Canada is making much of a profit on the game industry. The tax rate is set to 15% I think, and they literally pump hundreds of millions of dollars in these subsidies and tax breaks. It would take a lot of revenue to pay that off. Plus, a lot of the workforce in Canada is not native to Canada. The money is more likely to flow from the employee to family or friends in foreign countries. Remember that because of these tax breaks, a lot less of the money that flows into the Canadian industry does not come back in the Canadian treasury.
Also, the governments aren't helping the game industry because it's about to fall in the hard times. They do it because they want to be hip, and attract creative talent to their cities. I think it's a tad unfair for the people of a country to pay the salaries of an industry with their tax money, just because the government thinks it's cool. And as I mentioned before, I don't think it's a good long term policy. As soon as Canada will be trying to harvest the rewards for their encouraging policy by setting the taxes to normal levels, they will just leave to the United States. It's just a short term measure to temporarily boost the industry at the cost of the state.
Seems a little simplistic to claim government are spending this money to look cool. Investing in high-tech professional workers in a creative field. As Singapore and other places have proved, it's a viable longterm strategy to build competitive, high-value industries. As in Singapore, I'm assuming Quebec companies sign multi-year deals, probably based on the company growing as well. By the time you have a two or three-thousand person studio in a vibrant development community, just leaving is not such a simple option.
So? When the economy is crap that's when the state is supposed to invest it it. And with the size of the game industry in Quebec, I bet it's in the black for them by now ... they probably collect more in taxes than they pay out.
France is particularly vulnerable because of the cultural compatibility. The Quebec government is very happy to have French companies move to Quebec, in games and in other fields.
Also, the governments aren't helping the game industry because it's about to fall in the hard times. They do it because they want to be hip, and attract creative talent to their cities. I think it's a tad unfair for the people of a country to pay the salaries of an industry with their tax money, just because the government thinks it's cool. And as I mentioned before, I don't think it's a good long term policy. As soon as Canada will be trying to harvest the rewards for their encouraging policy by setting the taxes to normal levels, they will just leave to the United States. It's just a short term measure to temporarily boost the industry at the cost of the state.