The Global Competition for Video Game Tax Incentives

Nordicity, a consulting firm, has extensive experience with tax credits for the gaming industry, having collaborated with trade groups and governments worldwide to implement and navigate these incentives. The company's co-CEO, Kristian Roberts, recently shared his insights on the global landscape of gaming tax breaks. According to Roberts, the industry is witnessing a regional 'arms race' in Continental Europe and Australia-New Zealand, with countries competing to offer the most attractive tax breaks to lure game developers. New Zealand's recent adoption of a 20% tax break program, for instance, was largely driven by Australia's existing incentives, which put pressure on neighboring countries to follow suit. This phenomenon is not unique to these regions, as European countries like Italy and Ireland have also introduced tax credits in recent years, prompting other nations to reassess their own policies. Germany, traditionally averse to tax breaks, is now exploring the concept to remain competitive with countries like France, Italy, and the UK. Looking ahead, Roberts anticipates increased activity in South America and Southeast Asia, where 'mid-tier' jurisdictions are transitioning from service-based work to developing their own intellectual property. However, he notes that tax breaks are not a guarantee of success and may not necessarily lead to the creation of original IP or wealth generation. Instead, they primarily serve as a job-generating mechanism, making it easier for companies to employ people in the gaming industry. Roberts cites Canada as an example, where tax breaks have successfully grown the industry's headcount, but the resulting wealth largely accrues to foreign entities like Ubisoft and EA. To achieve wealth creation and new IP development, Roberts suggests that funding support for new IP, such as the Canadian Media Fund, can be a valuable complementary measure, enabling companies to establish and scale their own IP while tax breaks help reduce production costs.