Since the emergence of the video game industry, Europe has always been a hub of innovation and creativity. Numerous European studios have successfully captivated players worldwide with their original and high-quality productions. However, in the face of increased global competition, it has become imperative for European governments to find attractive ways to encourage and support local video game studios. One such approach is the "Tax Shelter," a financial mechanism that offers significant benefits to video game studios while stimulating the economy and employment in the region.
THE TAX SHELTER IN BRIEF
The Tax Shelter is a Belgian fiscal device that allows companies to benefit from tax breaks in exchange for their investment in cultural or artistic projects approved by the state. In other words, companies that invest in video game production can reduce their tax burden, which has a positive effect on their finances while promoting artistic and cultural creation. This mechanism has proven to be an effective catalyst for attracting investments and supporting creative industries in many European countries. Thanks to this mechanism, Belgian video game studios have an additional source of income to fund their production.
BUT HOW DOES THIS CONCERN EUROPEAN STUDIOS?
This mechanism promotes co-production among European studios, similar to what has been done for years in the film industry. Indeed, by partnering with a Belgian studio, a European studio can take advantage of this benefit to finance a portion of its game development.
In practical terms, let's imagine a French studio that is developing a game and seeking funding to complete its production. One of the options available is to collaborate with a Belgian studio, which can cover a portion of the production cost without any expense to the French studio. In practice, the Belgian studio can cover about 30% of the development costs through tax shelter financing.
Furthermore, for the French studio, this type of partnership allows them to avoid making artistic concessions by being dependent on a publisher.
The mechanism is fruitful as it helps both close production budgets and improve the quality of productions.
A COMPETITIVE ADVANTAGE
In an increasingly competitive global market, video game studios are constantly seeking competitive advantages to stand out. The Tax Shelter provides a unique opportunity for European studios by offering a means of obtaining funding while preserving their artistic creativity. It can also attract foreign investors looking to support promising projects while benefiting from tax advantages. This mechanism allows studios to retain ownership of their intellectual property and offers greater development autonomy.
TIPS FOR GETTING STARTED:
• Start Early Enough: When you have found a partner. It's important for studios to establish an agreement to define each party's roles and responsibilities. A thorough administrative process and meticulous monitoring will be required for the Belgian studio.
• Commit to a Secure Production: By benefiting from the tax shelter, studios are obligated to deliver a result. It's important for studios to engage in a serious project that is certain to be completed within 24 months.
• Don't Cheat! Studios must demonstrate transparency in both expenses and resources allocated to the project. A project benefiting from the tax shelter will be audited by the tax administration, so it's essential to maintain transparency throughout the project to avoid penalties.
CONCLUSION
The Tax Shelter is emerging as a powerful tool to attract video game studios to Europe. By offering attractive financial benefits while encouraging creativity, innovation, and economic growth, it represents an essential opportunity for businesses in the sector. This mechanism has already expanded the European film industry, and it is likely to have a similar impact on the video game industry in the coming years.