German Games Industry Presents Model Bill For Development Tax Credits


Written on 16 December 2016

Games are often cutting-edge technology, and always an important economic factor and a cultural asset. It is hardly surprising that many countries support their development for one or more of these reasons, often by granting tax credits or other tax incentives. Germany however does not yet have a dedicated incentive scheme. The German games industry association BIU has set out to change that, and recently presented a draft model bill on tax incentives for video game development.

The scheme was presented to the public in November at a debate night with members of the German parliament and industry representatives. The model bill promoted by BIU and drafted with the help of a number of tax lawyers (disclosure: including the author of this article) would provide for a tax credit of 25% of eligible video game development expenses. If the amount of tax owed by the studio is lower than this amount, the studio would receive a corresponding cash pay-out from the tax authorities.

Under the model bill, requirements to receive the tax benefit would include the following:

  • The game must be published within five years of the start of development.
  • Within that five year period, the studio must have had eligible development expenses of EUR 200,000 or more.
  • The studio claiming the tax credit must be subject to German taxes and must be the entity controlling the development process.
  • The game must pass a test of cultural significance, the details of which are still open for debate; this is largely due to requirements of EU legislation on public subsidies and not intended as a tool of censorship or state influence on game contents.
  • The tax credit can be combined with other development incentives.

The model bill has been received very favourably by members of the legislature and other representatives of government authorities at the federal and state level, and jump-started a lively discussion within the German games industry and beyond. While no legislative steps are expected prior to the general elections in Germany in the fall of 2017, the proposal merits close attention. We will report on any developments as they materialize.

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*This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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Felix Hilgert

Senior Associate, Maître en Droit, Germany

T +49 221 5108 4160

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