Tax Break for Video Game Sector on Table in Belgium (1)

1. Proposal seen halting developers’ exodus to other countries

2. U.K., Finland have tax shelters for video gaming

Belgium’s Finance Committee is voting on expanding an existing tax break for the country’s young video gaming industry.

Broadening the tax break, as proposed in a draft bill, would encourage companies to invest in development of video games and fuel the sector’s growth, lawmakers and tax advisers said.

Bron: Bloomberg Tax

The Belgian gaming industry generated 43.6 million euros ($48 million) in turnover in 2014.The measure, up for vote Feb. 6, would offer a tax exemption to Belgian companies or Belgian subsidiaries of foreign companies that invest in development of a video game, which typically costs around 30 to 50 million euros to make, according to the draft law’s commentary.

A similar regime for TV and film productions boosted the substantial growth of those industries in recent years, Luk Van Biesen, a lawmaker for the Flemish liberal party Open VLD, told Bloomberg Tax. Van Biesen has been pushing for the measure together with several other lawmakers.

“This proposal will cause the Belgian gaming industry to exponentially grow and to stay here,” Van Biesen said.

He noted that many start-up game developers today leave Belgium for other countries after a couple of years because they struggle to attract sufficient funds to finance further growth. “Or they are acquired by third-party, large financial players. So a gaming studio has a short life span in Belgium, because they are quickly bought up by foreign companies.”

Sector Boost

Both the U.K. and Finland have tax breaks for the video gaming industry.

The provisions aim to make it easier for start-up gaming companies to attract funds by giving companies that invest in video game development a tax benefit of 150 percent of the invested amount, Van Biesen said.

“The purpose of the tax shelter is to let private companies inve

st in other companies that are developing games,” Geert Coupez, of counsel at the Mythra tax boutique law firm, said in a Jan. 28 phone interview.

Pointing out that the tax break for film and TV productions had tremendously boosted those industries, he said, “This is going to give the sector an incredible boost, that’s for sure. A lot of people are waiting for this.”

Spokespersons for Larian Studios, Belgium’s best-known and largest video game developer, known for the Divinity series, didn’t respond to requests for comment.

David Verbruggen, a spokesman for the Flemish Games Association regional industry —which represents Dae Studios, Black Land Studio, and Fishing Cactus—federation, told Bloomberg Tax the proposal would boost not just the local video gaming industry, but the country’s economy at large.

“The tax shelter will remove the cold feet of investors as a result of which our developers will finally have larger budgets to compete in a competitive, global gaming economy,” he said in a Jan. 29 email.

“The tax shelter will also create the jobs of the future in our country and this way stem the brain drain” of graduates of local game design and development schools, he said, adding that the measure would also strengthen existing synergies between the audiovisual and video-gaming industry.

(Adds new date for vote in 4th paragraph.)

To contact the reporter responsible for this story: Linda A. Thompson in Brussels at correspondents@bna.com

To contact the editors responsible for this story: Penny Sukhraj at psukhraj@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com