TIGA, the independent trade association representing the video games industry welcomes the European Commission’s adoption of a Temporary Framework that enables Member states to use the full flexibility foreseen under state aid rules to support the economy, in the context of the COVID-19 crisis.
The temporary framework enables Member States to ensure that sufficient liquidity is available to businesses of all types, to help preserve the economy throughout and in the fallout of coronavirus.
The temporary framework allows Member States to step outside the normal state aid framework and immediately act through public support measures that are available to all companies such as wage subsidies, suspension of payments of corporate and value added taxes or social contributions.
For video games studios across Europe, this means:
- Direct grants, repayable advances or tax advantages
- Guarantees on loans contracted by the companies to the banks
- Loans to private companies by the Member State with subsidised interest rates
The adoption of the Temporary Framework is great news for the industry, which is being greatly affected by the outbreak of COVID-19. However, TIGA have laid out further priorities for the video games industry to enable them to be able to weather the coronavirus storm. The priorities are based on feedback from games developers, publishers and service providers in the video games industry and have been submitted to the Chancellor of the Exchequer.
They include:
- Video Games Tax Relief and R&D Tax Relief: VGTR is one industry’s most important Government tax measure. The Government should consider increasing the rate of VGTR and fast tracking claims for both VGTR and R&D Tax relief.
- Digital infrastructure: As a digital industry, many video games firms have been able to switch to remote working relatively quickly. However, it is not an ideal working arrangement, partly because of logistical and technical challenges, partly because game development is a highly collaborative process and partly because of productivity challenges. It will be vital to keep the digital infrastructure operating and to enhance home broadband speeds. The nature of development means that high speed broadband is essential. Some studios have been struggling with remote working because of slow broadband speeds.
- Encouraging Venture Capitalists (VC) to keep investing: financial market turmoil has resulted in promised VC investments evaporating. The Government should examine ways to incentivise VCs to invest in promising companies.
For more detail, please read TIGA’s Ten Proposals to Enable the Video Games Industry to Cope with Coronavirus.