18 Feb Finance Committee of the Belgian Chamber of Representatives approves tax shelter for the games industry
On 6 February, the Finance and Budget Committee of the Belgian Chamber of Representatives has approved (nearly unanimously) the extension of the scope of application of the tax shelter to the games industry. This marks the home stretch to approval in the plenary session.
The Belgian games industry is following up closely on this new measure, since its importance should not be underestimated:
- Investors subject to the standard corporate income tax can realize, at an EUROBIR 0, a net return of 8,46% over a period of (commonly) 18 months;
- The measure applies to investments made in the EEA, but is beefed up for investments in Belgium, so to strengthen the growth of the Belgian games industry and to stimulate job creation;
- The image of Belgium as a talent pool for the games industry is confirmed and strengthened further.
About the measure
The tax shelter already existed for companies investing in audiovisual and cinematographic productions and was extended to stage performing arts just last year.
The measure allows Belgian enterprises (or foreign enterprises having a so-called ‘permanent establishment’ in Belgium) a reduction of the taxable base in return for investments made in films, tv-series, opera, musicals or dance or theatre performances. This reduction can reach up to 356% of the invested amount (with a maximum threshold of 750.000 EUR), depending on the fiscal value of the tax shelter through attestation and depending on the retained earnings. This results in a fiscal net return of 5,30% of the amount invested.
In addition, the production company is allowed a financial return on the disbursements made by the investing enterprise in the framework of the tax shelter. This return may reach up to the average 12-month EURIBOR (of the last day of each month of the half calendar year preceding the payment) plus 450 basis points.
A success story
The measure didn’t miss the mark: the following figures (published on https://belgiumfilm.be/film-financing/tax-shelter) are self-explanatory:
- During the period from 2003 to 2016, more than 2.000 audiovisual works have been financed for an overall budget of over 1,4 billion EUR;
- In 2017, a total of 3.200 investors have invested 154 million EUR in audiovisual works through the tax shelter.
(Soon) also for the games industry?
Despite not resting on a long tradition, a bright future lies ahead for the burgeoning Belgian game industry. Moreover, a pool of bright young people is ready to conquer the world. Developing games, however, is becoming increasingly expensive and it takes time to get a return on investment. Currently, finding the much-needed funding is probably the main obstacle of every (starting) Belgian game developer.
This concern is to be addressed by expanding the tax shelter to the games industry. Expectations are high that this will allow the Belgian games sector to take the pole position in this billion-dollar industry – an industry bigger than the movie and music industries combined! Moreover, let us hope that this measure will stimulate entrepreneurship, job creation and the brain drain of Belgian talent to abroad.
Mythra has received several questions already regarding the tax shelter from those active in the games industry. For clarity’s sake, however, please note that the measure still needs to be approved in plenary session. Subsequently the measure has to be approved by Europe. Since similar measures exist in the U.K. and Finland, all expect the tax shelter will soon support our Belgian games developers.
In the tax newsletter ‘Fiscale Actualiteit n° 6 of 2019, an Article dedicated to this new measure was published by our colleague, Hendrik Putman.
Mythra has a strong focus on the tax aspects of Industry 4.0 and has ample experience with tax incentives pertaining to creativity and innovation. Do not hesitate to contact us for practical guidance.