Ireland announces new 32% tax credit for digital games

On 21 November, the Irish government announced a new 32% tax credit for the development of digital games. This compliments existing reliefs for companies focussed on innovation and will come into effect from 1 January 2023.

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This significant relief should drive new gaming sector investments from overseas. The government’s press release stated “The expected impact of a competitive games development incentive in Ireland will be to retain the operations of the main brands that are here through the addition of development activities, support the scaling up of indigenous developers, and to provide an attractive lure to international studios who have not already invested in Ireland.”

We understand the credit will be in addition to the 12.5% corporation tax deduction available for qualifying expenditure, thus providing net tax relief of 44.5% on development spend. This cumulative relief is significant and places Ireland in a strong position to develop as a jurisdiction of choice for the thriving global gaming sector.

Key features

We have summarised the key features of the regime below;

  • The relief will take the form of a refundable corporation tax credit available to digital games development companies for qualifying expenditure incurred on the design, production and testing of a digital game.
  • It will be offered at a rate of 32% of eligible expenditure.
  • The credit can be claimed for up to a total of €25 million per project.
  • There will be a €100,000 minimum spend requirement per project.

 

What next?

Regulations giving effect to the new credit are now to be signed by the Irish tax authorities. Applicants may then apply for an interim certificate from the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media for a qualifying digital game. It is expected certificate holders will then be able to apply for remuneration under the credit scheme from 1 January 2023.

We expect that detailed guidance will be issued by the Irish tax authorities in the coming weeks.

If you wish to discuss a potential application for the credit, please contact Aidan Byrne or Paddy Stapleton,or your usual RSM contact.

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