European Commission approves UK games tax breaks

The European Commission has approved UK games tax breaks a year after it blocked the incentives.

The news was announced by the EC today and confirms the 25 per cent tax rate is now available to all game developers in the UK who pass the cultural test.

It said that following an-indepth investigation, all initial doubts on whether the UK required tax breaks had been dispelled.

"Our initial doubts have been dispelled. The proposed aid for video games is indeed focusing on a small number of distinctive, culturally British games which have increasing difficulties to find private financing," said the Commission’s VP in charge of competition policy Joaquin Almunia.

The video games cultural test requires a game to be awarded 16 points to be eligible for tax breaks. Developers are awarded points for setting their game in the UK or another EEA state, using UK or EEA characters and from hiring British staff.

You can view the cultural test in full here.

UK games tax relief was first announced during the 2012 Budget by George Osborne. It been expected to go through on April 1st 2013 but was blocked by the European Commission which questioned whether there was a real market failure in the UK.

Following a state of limbo that has lasted a year and campaigning by UK trade bodies UKIE and TIGA as well as a host of developers, the EC has finally lifted its block on games tax relief.