(Almost) no sooner has the Finance Bill formally introduced the long-awaited tax incentive for the video games industry, than the European Commission has voiced concerns that it may not pass the stringent EU State Aid rules.
In a press release entitled, State Aid: UK Video Games Tax Relief Faces Commission Scrutiny the European Commission considers that there is no “obvious market failure” which needs to be addressed and “doubts that the aid is necessary”. This is somewhat surprising at this stage, given that the Treasury has apparently been consulting on the relief for many months – George Osborne was talking about the relief as far back as April 2012.
The Commission appears also to be concerned that the introduction of the incentive in the UK might “fuel a subsidy race” between Member States. This likewise seems odd, given that France has had a similar tax relief for several years – although it’s hardly a race while there’s only one runner, eh?
To be fair, when France’s tax relief was up for renewal in 2011/12, it was apparently subjected to comprehensive review, before approval. But having so carefully made that decision, why labour it again?
And then we come to the recent announcement that the UK intends to challenge the new Financial Transaction Tax through the European Courts. Horse trade, anyone?
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