Brussels, 23/11/2006 (Agence Europe) - On 22 November, the European Commission approved the United Kingdom's film tax incentive scheme and opened an in-depth investigation into a French proposal to grant a tax credit for video game creation: two different outcomes which depend on the interpretation of the Community regulation that allows tax credits to promote culture or preserve the cultural heritage.
The United Kingdom was granted Commission approval for a scheme using tax-based incentives to encourage film makers to produce cultural British films. The scheme was approved until 31 March 2012 on the basis of the revised UK Cultural Test. The Commission's assessment of the scheme was based on the criteria outlined in its 2001 communication on cinema and audiovisual productions. Competition Commissioner Neelie Kroes said she was satisfied the UK scheme complied with the conditions set out in the audiovisual communication and confirmed that European co-productions could benefit from it.
On the other hand, the French case presents the Commission with a problem. Paris says the measure to grant a tax credit for video game creation is compatible with Community rules as its aim is to promote culture. At this point, however, the Commission feels that it is not clear that the selection criteria guarantee cultural content, since they do not exclude, for example, simulation video games or video games based on motor car races. The in-depth investigation will enable it to elucidate this point and to ensure that the measure “will not have the effect of an industrial policy instrument in favour of video games,” said Ms Kroes. The European video game industry faces growing international competition from Asia and North America, but the Commission has to take account of the effect such a tax advantage might have on European competitors of beneficiary firms. (cd)