French game developers are on the verge of losing tax breaks as the result of an EU-wide ban, with Ubisoft likely to be affected significantly and Heavy Rain studio Quantic Dreams looking to move resources to Canada.
State aid is generally forbidden in EU law, but in 2007 tax breaks for game developers were recognised as an exception until 2012.
European Commission directorate general for compeition, Wouter Pieke, is now required to approve a reintroduction of the measure, but Develop sources indicate there's "genuine concern" the EU will opt not to reintroduce the tax break.
According to the source the issues officials are facing is whether the benefits can give development companies in one state an unfair advantage over others. Compounding that issue is the French government's budgetary crisis.
Developers in other EU states and the UK risk losing any chance of game tax breaks unless the original exemption is extended.
Quantic Dreams, the studio behind Heavy Rain, has reportedly indicated that it is likely to transfer resources to Canada should the tax break ban become permanent.
"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," said Guillaume de Fondaumiere, the co-CEO of Quantic Dream.
"We would like to point out that this French measure has not caused any distortion in competition within the EU," he wrote in a letter to Pieke.
The ban is likely to affect Ubisoft significantly; the developer and publisher moved a large portion of its development business into France specifically because of the tax breaks, a fact which Fondaumiere pointed out.
"Ubisoft has relocated some of its production activities back to France between 2008 and 2011 - a step they clearly attributed to the video game tax credit," he said.
The UK games industry has battled for tax breaks for several years, but is said to be losing large numbers of workers to Canada.
Comments
17 comments so far...
KMakawa on 8 Feb '12 said:
Canada's done it perfectly, I visit Vancouver every year to the EA Vancouver branch and its an amazing place to be, very close-feeling between every studio, vancouver is one of the 'hubs' for the gaming industry. They've done the tax break perfectly and more or less Canada is gaining a ton out of it all due to clever thinking.
EU wide ban means more will move to Canada, and setup shop there.
Tough times ahead for Ubisoft since most of their operations are now in France, this may mean a change is in order for Ubisoft in coming year+.
Stupid governments still dont realize how powerful the gaming industry is.
benedictm on 8 Feb '12 said:
This sucks hugely. Short sighted and foolish.
Tell you what how about the companies that owe tax - like i dunno Voda-f**king-fone - pay it
that should cover any tax break nicely.
justforkicks101 on 8 Feb '12 said:
hey ho
hi0marc on 8 Feb '12 said:
Well the Eurozone is doing fine and doesnt really need 'jobs' at the moment anyway...
bigste26 on 8 Feb '12 said:
well well well the government want more illegal taxes and steal more of the peoples pensions lets take there pensions and expenses cut there pay buy 50% we got to wake up people STOP THE CONMEN the eurozone is on its ass
theideal on 8 Feb '12 said:
You're missing the main reason to be there... The awesome waffles in the canteen
KMakawa on 8 Feb '12 said:
Not a fan of Waffles mate, but the Coffee is mighty-fiiine. Liquid gold I tell you.
theideal on 8 Feb '12 said:
EA waffles can convert any waffle hater.
alan666 on 8 Feb '12 said:
good !
i hope all the developers leave the EU.
i'm not being sarcastic either.
StonecoldMC on 8 Feb '12 said:
I see what you did there
StonecoldMC on 8 Feb '12 said:
WTF? Seriously, WTF?
You are being sarcastic aren't you?
KMakawa on 8 Feb '12 said:
Well.. without a few billion propping up some countrys from the Games Industry tax take-ins and whatnot, all that moving to Canada.. Those countrys that they've just left will be woken up with a very large slap, so in a sense.. I kind of hope that they move out, even if its means its gonna be harder for me work-wise. Ill always have vancouver's HQ and ill just work from home instead - so it doesnt impact me entirely.
When they realize that there is virtually no games industry in the countrys, only game retail revenue - then they'll think twice..hopefully.
ithurtstopoop on 8 Feb '12 said:
Sacre Bleu!!!
Megatrons_Fury on 8 Feb '12 said:
If i lived in france i would move to canada too
Sometimes the obvious thing to say is the right thing to say
alan666 on 8 Feb '12 said:
nope,
the EU won't allow a few million Euro's to be spent helping out hi-tech industries, but they will continue to spend fifty plus billion Euro's a year for farming subsidies,
In 2010, the EU spent €57 billion on agricultural development, of which €39 billion was spent on direct subsidies, Agricultural and fisheries subsidies form over 40% of the EU budget
http://en.wikipedia.org/wiki/Agricultural_subsidy
as KMakawa said, it will be a wake-up call to the EU, it will have zero effect on us gamers if the developers & publishers move to Canada, or wherever else, you have no problem buying Nintendo games created in Japan or playing Rockstar games created in America.
Mmmmgrolsch on 9 Feb '12 said:
Genuine question, why do they need tax breaks? I could swear Ubisoft are raking it millions and millions. If they are on a tax break for 5 years then f**k off, how did that make the government any money? The reason I ask is, there are much bigger industry's in terms of employees etc that are struggling much worse and haven't got any tax breaks. I just think if one gets tax breaks, so should every other industry, the gaming industry makes an insane amount of profit.
Perhaps I'm missing something? Anyone care to tell me thanks.
ricflair on 9 Feb '12 said:
I'm kind of the same grolsch. Companies like EA, Ubi etc, why do they need them? I know it contributes a lot to the economy but so do loads of other industries. Yes we all love games, and it's good to see a strong British development industry as we do have some great developers, but loads of developers are owned by multimillion/billion dollar companies anyway, but why is gaming special?
If everyone in Europe offered tax breaks we'd all be in the same boat anyway. If I take off my gaming hat, I can't see an argument for gaming above any other industry. Although I agree with alan about the farming subsidies in relation to stuff like this - although that comes back to my question of why some industries and not others. Although I'd argue that food etc is slightly more important than games.
I understand that if you offer tax breaks you'll get more companies that are still paying some tax and contributing to economy, but if we started doing and others do too, and you have to draw the line somewhere. We might as well do it for the small companies that support local communities in tough areas, they probably have a larger social impact. I know that's not a popular view on here, but hey ho.