Revenue Note for Guidance

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Revenue Note for Guidance

481A Digital Games Relief

Summary

Digital games relief is an incentive to digital games developers to produce digital games that contribute to the promotion and expression of Irish and European culture.

The relief is a corporation tax credit for digital games development companies. The rate of the credit is 32% of the lowest of eligible expenditure, 80% of qualifying expenditure, or €25 million per game.

The credit is available on expenditure incurred in the design, production and testing stages of the development of qualifying digital games, provided certain conditions are met.

In order to be eligible, the qualifying expenditure must not be less than €100,000.

A cultural test also applies. In order to claim the credit, a company must first apply for cultural certification as a qualifying digital game by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media.

An interim cultural certificate may be applied for at any point before or during the development of the digital game and will allow relief to be claimed on an interim basis annually. A final cultural certificate is applied for on completion of the digital game and will allow the company claim either the full amount of the credit or, if the company has previously claimed relief on an interim basis, the balance of the credit due.

Details

Definitions

“date of completion” means when the qualifying digital game is made available to the public or, if commissioned, when the game has been provided to the commissioning entity.

(1) “Digital game” means a game which integrates digital technology and incorporates at least three of the following classes of information, in digital form: text, sound, still images and animated images. The game must be capable of being published on an electronic medium, and controlled by software enabling the person playing the game to interact fully with the dynamics of the game, including by providing feedback to the person, enabling control over elements of the game by the person and allowing the person to adapt elements of the game.

“digital games corporation tax credit” in relation to a qualifying digital game, means an amount equal to 32 per cent of the lowest of—

  1. the eligible expenditure amount,
  2. 80 per cent of the qualifying expenditure, and
  3. €25,000,000.

“digital games development company” means a company that—

  1. is resident in the State, or is resident in an EEA State other than the State and carries on business in the State through a branch or agency,
  2. carries on a trade of developing digital games on a commercial basis with a view to the realisation of profit, and that are wholly or principally to be made available to the public,
  3. has delivered a return to the Collector-General, in accordance with section 959I, in respect of either
    • the accounting period referred to in paragraph (a) of the definition of “qualifying period”, or
    • each accounting period ending in the qualifying period, referred to in paragraph (b) of that definition, as the case may be, and
  4. is not part of an undertaking which would be regarded as an undertaking in difficulty.

“eligible digital game” means a digital game which —

  1. is developed on a commercial basis with a view to the realisation of profit,
  2. is wholly or mainly to be made available to the public,
  3. is an exempted work within the meaning of the Video Recordings Act 1989, and
  4. is not a digital game produced solely or mainly for promotional or gambling purposes.

“eligible expenditure” means the portion of the qualifying expenditure that is expended on the development of the digital game in the State or the European Economic Area (EEA) as set out in regulations.

“final certificate” means a certificate issued by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media under subsection (9).

“interim certificate” means a certificate issued by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media under subsection (4).

“interim digital game” means a digital game which is proposed to be developed or is in the process of development in respect of which an interim certificate has been issued by the Minister, and no final certificate has been issued.

“interim digital games corporation tax credit”, in relation to an interim digital game, means an amount of expenditure incurred in an accounting period equal to 32 per cent of the lowest of—

  1. the eligible expenditure amount,
  2. 80 per cent of the qualifying expenditure, and
  3. €25,000,000.

“qualifying digital game” means a digital game in respect of which the Minister has issued a final certificate.

“qualifying expenditure”, in relation to a qualifying digital game, is expenditure incurred by the digital games development company on design, production and testing of a digital game in accordance with regulations. Design, production and testing of a digital game are stages of the development of the digital game.

“qualifying period” refers to the most recent accounting period of the producer company, the specified return date for which has passed, that falls before the date of the claim for the credit. Where that accounting period is less than 12 months, then the qualifying period includes the last accounting period before the short accounting period.

“Rescuing & Restructuring Guidelines” is defined as the 2014 Commission Guidelines for State aid for rescuing and restructuring non-financial undertakings in difficulty.

“specified amount” has the meaning given to it by subsection (23).

“the Minister” means the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media.

“undertaking” is defined as meaning a business grouping that would be regarded as an undertaking for the purposes of the Rescuing & Restructuring Guidelines.

“undertaking in difficulty” is given the same meaning as in the Rescuing & Restructuring Guidelines.

Application for Certification

Interim Certification

A digital games development company may apply to the Minister for either an interim certificate, in respect of a digital game to be developed by the company, or a final certificate in the case of a digital game developed and completed by the company.

(2) Applications for interim or final certificates are to be made on forms approved by the Minister and contain such information as is set out in regulations.

(3) The Minister may issue an interim certificate following receipt of an application from a digital games development company, subject to subsection (5) and in accordance with regulations, stating

  • that the certificate is an interim certificate,
  • (4) that the digital game may be treated as an interim digital game for the purposes of the section, and
  • the expiry date of the interim certificate.

In considering whether to issue an interim certificate, the Minister must consider

  • whether the digital game as proposed is likely to be an eligible digital game when completed, and,
  • (5) any contribution which the development of the digital game is expected to make to the promotion and expression of Irish and European culture by reference to the following factors:
    • (5)(a) the cultural content of the game, including its setting, principal characters, language and subject matter;
    • (5)(b) any cultural creativity employed in the development of the game, including innovation in the portrayal of Irish or European culture, the use of materials written or created in Ireland or Europe as the basis for the game, technological innovation or the use of music created by a composer who is a national of or ordinarily resident in Ireland or another EEA state;
    • the contribution of the game to the development of a concentration of cultural activity, by reference to such matters as the proportion of the creative work carried out in Ireland or another EEA state, the number of key positions in the development of the game occupied by persons who are nationals of or ordinarily resident in Ireland or another EEA state, and the proportion of the members of the development team who are nationals of or ordinarily resident in Ireland or another EEA state;
    • the concomitant cultural contribution of the game, by reference to matters including the educational content of games aimed at children and the inclusion of themes relating to diversity and equality,
    • whether the content of the game promotes the protection, restoration and promotion of sustainable use of Irish or European terrestrial ecosystems or the raising of awareness of the exigencies of increasing environmental sustainability and minimising climate change.

The Minister may specify conditions in the interim certificate including

  • in relation to the employment responsibilities of the digital games development company for the development of that digital game, and
  • (6) the maximum aid intensity which may be availed of for the development of the digital game by reference to the “Cinema Communication” being the Communication from the Commission (2013/C 332/01).

The Minister may amend or revoke any condition specified in an interim certificate or add to such conditions, by giving notice in writing to the digital games development company and in those circumstances section 481A will apply as if any amended, additional or revoked condition was always reflected in the interim certificate.

(7) On the expiry of an interim certificate, the interim certificate will cease to have effect and is treated as never having had effect unless

  • an application has been made in advance of the expiry date to the Minister for a final certificate, and
  • (8) on the determination of that application, a final certificate is issued by the Minister.

Final Certification

The Minister may issue a final certificate following receipt of an application from a digital games development company, subject to subsection (10) and in accordance with regulations, stating

  • that the certificate is a final certificate,
  • that the digital game may be treated as a qualifying digital game for the purposes of section 481A.

(9) When considering whether to issue a final certificate the Minister must consider

  • whether the digital game meets the eligibility criteria for certification,
  • any contribution which the development of the digital game makes to the promotion and expression of Irish and European culture having regard to the factors set out in subsection 5, and
  • (10)
    (10)(a)
    (10)(b)     where an interim certificate has been issued in respect of the digital game, whether the conditions specified in the interim certificate have been satisfied.

The Minister may specify conditions in the final certificate including

  • (10)(c) in relation to the employment responsibilities of the digital games development company for the development of that digital game, and
  • (11) the maximum aid intensity which may be availed of for the development of the digital game by reference to the “Cinema Communication” being the Communication from the Commission (2013/C 332/01).

The Minister may amend or revoke any condition specified in a final certificate or add to such conditions, by giving notice in writing to the digital games development company and in those circumstances section 481A will apply as if any amended, additional or revoked condition was always reflected in the certificate.

Claims for the digital games corporation tax credit

(12) A digital games development company may not make a claim for an interim digital games corporation tax credit under subsection (19) or a digital games corporation tax credit under subsection (20) if any of the following apply:

  1. (13) there has not been issued to the digital games development company either an interim certificate, as respects claims under subsection (19) for the interim digital games corporation tax credit, or a final certificate, as respects claims under subsection (20) for the digital games corporation tax credit, by the Minister in respect of that digital game,
  2. (13)(a) the interim certificate, if issued, has expired and a final certificate has not been issued by the Minister in respect of that digital game,
  3. the digital games development company, any company controlled by the digital games development company and the majority shareholders of the digital games development company is not tax compliant,
  4. (13)(b) the qualifying expenditure amount is less than €100,000,
  5. the company is an undertaking in difficulty
  6. (13)(c) any company in an undertaking of which the digital games development company is part is the subject of an outstanding recovery order made by the Commission for illegal State aid.

(13)(d)
(13)(e)

Conditions in relation to producer companies

(13)(f) A digital games development company may not make a claim for an interim digital games corporation tax credit under subsection (19) or a digital games corporation tax credit under subsection (20) if

  1. any particular item of expenditure in the claim is inflated,
  2. (14) the company has obtained relief under Part 29 Patents, Scientific and Certain Other Research, Know-How and Certain Training in respect of the expenditure,
  3. the company has obtained relief under section 481 Relief for investment in films in respect of the expenditure,
  4. (14)(a) the expenditure has been otherwise subsidised,
  5. (14)(b) there is no commercial rationale for the corporate structure proposed for either the production, financing, distribution or sale of the digital game, or for all of those purposes,
  6. (14)(c) the corporate structure would hinder the Revenue Commissioners in verifying compliance with the conditions governing the relief, or
  7. (14)(d)
    (14)(e)     the company does not have such information and records available in advance of making a claim as the Revenue Commissioners may require to determine that any claim made is in compliance with the section.

Consultation by the Revenue Commissioners with other persons

(14)(f)
(14)(g) In carrying out their functions under the section, the Revenue Commissioners may consult with any person, agency or body of persons and may disclose any detail of the company’s application, where necessary, for the purposes of such consultations. This includes where there is reason to believe that financial arrangements not allowed under subsection (16)(a) have be entered into.

Circumstances in which a company will not be regarded as a digital games development company

(15)Subsection 16 provides that a company will not be regarded as a digital games development company if any of the following apply:

  1. if the financial arrangements which the company enters into in relation to the digital game are:
    • (16) financial arrangements of any type with a person resident, registered or operating in a country other than a Member State of the European Communities, or other than a country with which Ireland has a Double Taxation Agreement under section 826(1), or,
    • (16)(a) financial arrangements under which funds are channelled, directly or indirectly, to or through a territory other than a Member State of the European Communities, or other than a country with which Ireland has a Double Taxation Agreement unless subclauses (A), (B) and (C) apply.
      These subclauses set out the circumstances in which a digital games development company that enters into the type of financial arrangements to which subsection 16 relate shall nonetheless be regarded as a digital games development company which are as follows:
      (A) where the arrangements relate to the development of the game in a territory other than a Member State of the European Communities, or a country with which Ireland has a Double Taxation Agreement under section 826(1),
      (B) the digital games development company has sufficient records to verify the amount of each item of expenditure in the territory and
      (C) the digital games development company has such records in place to substantiate such expenditure in advance of making a claim for the digital games corporation tax credit.
  2. (16)(b) a company will not be regarded as a digital games development company unless it provides evidence to vouch each item of expenditure in the State, or elsewhere, on the development of the digital game when requested to do so by the Revenue Commissioners, for the purposes of verifying compliance with the provisions governing the relief. This requirement applies whether expenditure is by the company or by any other person engaged, directly or indirectly, by the company to provide goods, services or facilities in relation to the digital game. In particular the evidence provided must include:
    1. records required to be kept or retained by the company by virtue of section 886 (for example, accounts, books of account, documents etc. relating to all sums of money received or expended in the course of the carrying on of the trade, all purchases and sales of goods and services, the assets and liabilities of the trade and all transactions which constitute the acquisition or disposal of an asset for CGT purposes).
    2. similar records required to be maintained by any other person under section 886, or which would be so required if that other person was subject to the provisions of that section.
  3. a company shall not be a digital games development company unless the company provides a copy of the game to the Revenue Commissioners when requested to do so for the purposes of verifying compliance with the section or with any condition specified in a certificate issued by the Minister.
  4. a company will not be regarded as a digital games development company unless the company:
    • (16)(c) notifies the Minister in writing of the date of completion of the game, and
    • provides to the Minister copies of the game in the format and manner specified in regulations.
  5. (16)(d) a company will not be regarded as a digital games development company unless the company provides to the Revenue Commissioners a compliance report, in the format and manner specified in regulations, which proves to their satisfaction that the provisions of this section which relate to the company and the digital game have been met and that any conditions attaching to an interim or final certificate have been met, and,
  6. (16)(e) a company will not be regarded as a digital games development company if it ceases to carry on the trade of developing digital games within 12 months of submitting a compliance report.

Regulations

(16)(f) The Revenue Commissioners may make regulations relating to the administration of the relief with the consent of the Minister for Finance, and with the consent of the Minister for for Tourism, Culture, Arts, Gaeltacht, Sport and Media in relation to the matters to be considered by that Minister regarding the issue of interim and final certificates.

The regulations may include provisions as follows:

  1. (17) governing the application for interim certification or final certification, the timing of such applications, and the information and documents to be provided in or with such applications,
  2. the information required to be included in the application made to the Minister by a digital games development company,
  3. (17)(a) specifying the time within which a digital games development company shall notify the Minister of the completion of the development of a qualifying digital game,
  4. specifying the time within which, and the format, number of copies and manner in which, a qualifying digital game shall be provided to the Minister,
  5. (17)(b)governing the records that a digital games development company shall maintain or provide to the Revenue Commissioners,
  6. (17)(c) governing the period for which, and the place at which, such records shall be maintained,
  7. (17)(d)
    (17)(e)     specifying the form and content of the compliance report that must be available in accordance with subsection (16)(f), the manner in which such report shall be made and verified, and the documents to accompany the report,
  8. (17)(f) governing the type of expenditure which may be treated as qualifying or eligible expenditure on the development of a qualifying digital game,
  9. (17)(g) specifying the currency exchange rate to be applied to expenditure on the production of a qualifying digital game,
  10. governing financial arrangements in accordance with subsection (7)(a), and
  11. (17)(h) governing the payment of the specified amount by the Revenue Commissioners to the digital games development company.

(17)(i)

(17)(j)
(17)(k)

Regulations governing qualifying and eligible expenditure

When making regulations under subsection (17)(h) governing the type of expenditure which may be treated as qualifying or eligible expenditure on the development of a qualifying digital game, shall have regard to—

  1. whether the type of expenditure relates to design, production or testing and the stage of development of the game in which the expenditure is incurred,
  2. (18) whether the type of expenditure is directly related to design, production and testing, and
  3. (18)(a) the extent to which the type of expenditure is incurred directly by the digital games development company on design, production or testing.

Making a claim for the interim digital games corporation tax credit

(18)(b)
(18)(c) Where the Minister has issued an interim certificate, and the provisions of section 481A have been complied with, a digital games development company may make a claim in advance of the completion of the game for the interim digital games corporation tax credit provided—

  1. (19) the claim is made within 12 months of the end of the accounting period in which the expenditure giving rise to the claim is incurred,
  2. the interim certificate has not expired, and
  3. the aggregate of all claims made pursuant to the interim certificate does not exceed 32% of €25,000,000.

Making a claim for the digital games corporation tax credit

Where the Minister has issued a final certificate, and the provisions of section 481A have been complied with, a digital games development company may make a claim following completion of the game for the digital games corporation tax credit less any amount already claimed pursuant to subsection 19.

(20) Corporation tax return

A claim for the interim digital games corporation tax credit under subsection 19 or the digital games corporation tax credit under subsection 20 is made in the corporation tax return which immediately precedes the making of the claim, being the last corporation tax return that the digital games company was required to file provided that the specified return date has passed and the return is for a 12 month accounting period.

(21) Payment of the Credit

Where a claim has been made in accordance with the provisions of the section, the corporation tax of the digital games development company for the qualifying period will be reduced by an amount equal to either the interim digital games corporation tax credit or the digital games corporation tax credit, as the case may be.

(22) Where the amount of either the interim digital games corporation tax credit or the digital games corporation tax credit exceeds the corporation tax of the company for the qualifying period, the excess, known as the “specified amount”, is paid to the company by the Revenue Commissioners.

(23) Any amount payable by the Revenue Commissioners to the company by virtue of subsection (23) is deemed to be an overpayment of corporation tax, for the purpose only of section 960H(2).

(24) Any claim in respect of a specified amount shall be deemed for the purposes of section 1077F to be a claim in connection with a credit and, for the purposes of determining an amount in accordance with section 1077F(3) or 1077F(5), a reference to an amount of tax that would have been payable for the relevant periods by the person concerned shall be read as if it were a specified amount.

(25) Where the Revenue Commissioners have paid a specified amount and it is subsequently found that all or part of the amount is not as authorised, then the company, any director of the company, or the majority shareholders of the company shall be liable to tax in an amount equal to 4 times, in the case of a company, or one hundred fortieths in the case of an individual, of the unauthorised amount.

(26) The circumstances in which an unauthorised amount arises include any circumstances where the amount was claimed by the digital games development company or paid by the Revenue Commissioners and

  1. the company made a claim contrary to the section,
  2. (27) the company failed to comply with any conditions or obligations imposed by section 481A, the Regulations or the interim and/or final certificate issued or
  3. fails to remain tax compliant for at least 12 months after the date of provision of a compliance report.

Where the Revenue Commissioners make or amends an assessment in respect of a specified amount, the assessment will be deemed to be tax due and shall carry interest as determined in accordance with section 1080.

Publication requirements

(28) Revenue’s publication obligations in accordance with State aid transparency requirements are as follows:

  1. the name of the company;
  2. the name of the digital game;
  3. (29) the number of the certificate of incorporation of the company;
  4. in respect of the principal activity carried on by the company, the NACE classification code
  5. the amount of interim digital games corporation tax credit or digital games corporation tax credit, as the case may be,
  6. whether the company is—
    1. a category of enterprise referred to in Article 2.1 of Annex 1 to Commission Regulation (EU) No. 651/2014 of 17 June 20141,
      or
    2. a category of enterprise which is larger than the categories of enterprise referred to in subparagraph (i);
  7. the territorial unit, within the meaning of the NUTS Level 2 classification specified in Annex 1 to Regulation (EC) No. 1059/2003 of the European Parliament and of the Council of 26 May 20032.

The Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media a service provider with respect to the administration of the credit for the purposes of section 851A.

(30) The Revenue Commissioners shall not pay a specified amount to a digital games development company in respect of an interim or final certificate issued after 31 December 2025.

(31) Every regulation made by the Revenue Commissioners under section 481A shall be laid before Dáil Éireann as soon as may be after it is made. This is in line with the customary procedure in relation to the laying of statutory instruments and provides Dáil Éireann with the opportunity to annul the regulations, if it so wishes, within the next 21 days on which Dáil Éireann has sat after the regulations are laid before it.

(32)

Footnotes

1 OJ No. L187, 26.6.2014, p. 70

2 OJ No. L154, 21.6.2003, p. 1

Relevant Date: Finance Act 2021