Corporation Tax

Video games tax relief ― the separate video game trade

Produced by Tolley
  • 22 Dec 2021 16:13

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Video games tax relief ― the separate video game trade
  • Introduction
  • The separate video game trade
  • Calculating the profits and losses of the separate trade
  • Income
  • Expenses
  • Obtaining the relevant information

Video games tax relief ― the separate video game trade

Introduction

This guidance note supplements the Video games tax relief ― key provisions guidance note which sets out the main conditions to be satisfied in order to qualify for relief. The legislation relating to video games tax relief (VGTR) was introduced in Finance Act 2013 and is contained in CTA 2009, ss 1217A–1217EC (Pt 15B). Following an in-depth investigation by the European Commission to determine whether the development of video games in the UK requires support in the form of tax incentives, it concluded that the relief was compatible with EU State Aid rules in March 2014. The relief came into effect from 1 April 2014.

From 1 January 2021, under the ‘level playing field’ provisions of the EU-UK Trade and Cooperation Agreement (TCA), the UK has the ability to establish its own state aid or subsidy control system. On 30 June 2021, the Government published the Subsidy Control Bill which provides details of how the UK subsidy control system will operate. However, the application of EU state aid law (at least in respect of trading in goods) continues to apply in Northern Ireland, as set out in Article 10 and Annex 5 of the Northern Ireland Protocol.

The requirement to comply with EU state aid rules as part of the NI Protocol is likely to add complexity to establishing the subsidy control system in the UK. Under the Protocol, the UK is required to comply with EU state aid rules where any

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