Taxing news: Will the EU really trample over our game developers?
9th Feb 2012 | 11:31
Fantastic news has just come in from the EU for developers... the ones in Canada, Singapore and the US, that is.
Because it turns out that Brussels has effectively imposed a ban on tax breaks for developers across the whole of the European Union. Ironically, given that along with Germany, it is the country that goes in to bat most enthusiastically for the EU, France is the country whose games industry could be decimated by the latest high-handed - and utterly senseless - outbreak of supranationalism among the legendary lunchers of the Belgian capital.
Apparently, tax breaks of any kind are ideologically forbidden by EU law, but in 2007, the French Government managed to negotiate a deal allowing it to provide tax relief to games developers.
The results were palpable: what was a previously small and distinctly ropey national development scene - as anyone who had the misfortune of playing pretty much anything published by the unlamented Infogrames will tell you - was transformed into a major player on the world stage.
Ubisoft, in particular, took advantage to grow into a major heavy-hitter: these days, it really snaps at the heels of EA and Activision.
But the agreement between the French Government and the EU expired at the start of 2012, and now it seems that the EU is being characteristically stroppy and obstructive about reintroducing it. A gentleman named Wouter Pieke, who luxuriates in the Orwellian job title of Head of Unit, EC Directorate General for Competition, would have to approve such a move, and French officials negotiating with him and his team are reportedly becoming worried that the new status quo will be here to stay.
It won't have an immediate effect, as any games already under development in France are still eligible for tax relief, but already Quantic dream co-CEO Guillaume de Fondaumiere has said that: "The abandonment of this flagship measure... would be an historic mistake."
He also pointed out that it would lead to a similar brain-drain among developers to that which is currently afflicting the UK. Where, of course, we have a Government that was enthusiastically in favour of games tax relief in opposition but changed its tune once it was voted in -- and which replaced a Government that was about to implement the measure when it was voted out.
Straight bananas only
The EU's argument seems to be that development tax-breaks might give one of its member countries an unfair advantage over the others. Which sounds to us more like an argument for giving all its member countries the ability to decide whether or not to provide their games developers with tax-breaks. It's like decreeing that only straight bananas can be sold in Europe, because some countries grow ones which are bendier than those cultivated by other countries.
The single attractive point of the EU (particularly now that the Euro is in the process of disintegration) was supposed to be that collectively, it could present a more competitive economic front in competition with the rest of the world.
As far as the games industry is concerned, Europe contains two world-class big-hitters: the UK and France. The UK punches above its weight for historical reasons: we became good at making games when Sir Clive Sinclair made cheap personal computers available to the masses, and we've remained so because it turned out that we have a talent for it. Which, nowadays, is best illustrated by the uncommonly large numbers of Brits you find when visiting Canadian developers. France only truly became a global player in the games industry when it introduced tax-breaks.
Canada here we come
It could very quickly return to the ranks of the also-rans: Ubisoft has had a massive development presence in Canada for years -- it actually moved significant resources back home after tax-breaks were introduced. Quantic Dreams has said it will relocate to Canada if tax relief isn't reintroduced.
The whole farce, though, at least provides David Cameron with another opportunity to appease his EU-baiting backbenchers - just think how apoplectic Mr Pieke would be if Britain were to introduce development tax breaks now? Which, ironically, increases the chance of that happening if, say, Cameron was outmanoeuvred and forced against his wishes to chuck more billions down the black hole formerly known as the Euro.
There's a whiff of some other agenda in play which hasn't yet surfaced: while the EU loves making Moses-like decrees along the lines of "Thou shalt not offer anyone any form of tax-relief", how often does it actually enforce them? If it's really concerned about anti-competitiveness, why doesn't it do something, say, about Ireland's anomalously low Corporation Tax? Did some Frenchman take Mr Pieke to a sub-standard restaurant (some achievement, given that Brussels is primarily noted for the quality of its eating-houses)?
Small wonder, then, that even such a talentless bunch of dead-beats as UKIP are taken seriously these days. We shudder to say it, but perhaps, on this evidence, Cameron was right to take his unilateral decision to move the UK to the periphery of Europe. Much more of this sort of stuff, and he might feel emboldened to hold a referendum on whether to remain in the EU at all. And the shocking thing is that he might actually win it.