Proposal for incentivizing the video game industry through tax deductions

On May 12, the Industry, Commerce and Tourism Committee of the Spanish Congress adopted a non-legislative proposal (the “Proposal”) aimed at attracting foreign investment to (i) advance Spain’s video game industry; and (ii) encourage video game companies to develop and sell new projects and create jobs.

The Proposal suggests various measures, including that the video game industry be acknowledged as an emerging, developing and expanding sector. The Proposal also requests that article 36 of the Corporate Income Tax Act (the “CIT Act”) be amended so that tax incentives under this article be extended to video game production.

These tax deductions under article 36 are currently applicable and provided to other cultural sectors, like film productions, TV series and live theater and music events. Since their introduction, audiovisual productions and live events have increased and developed, mostly due to the incentives.

The Proposal also urges the Government to allocate part of the Next Generation EU recovery funds to (i) implementing a specific program supporting the video game industry through RED.es; and (ii) opening a support line for innovation in the video game industry within the Center for Technological and Industrial Development (CDTI).

We will pay attention to the implementation of these proposals to see if the boost to Spain’s video game industry is in line with the other entertainment sectors.

Autores: Ismael González, Jorge Monclús y Beatriz Díez.