Games in Spain do not benefit from fiscal measures to support the cultural sector

To alleviate the devastating effects of coronavirus (COVID-19) in the Spanish economy, the Government has launched a Royal Decree-law to benefit the entertainment sector: In this way, industries such as film, audiovisual series and live performances of performing and musical arts will take advantage the so-called investment deduction. However, as pointed out by DEV (The Spanish Association of Companies Producing and Developing Video Games and Entertainment Software), the video game industry has been excluded from this measure. Conversely, the Government s to inject 70 million euros in order to boost the technology and development industry.

The video game is not present in the investment deduction

What is an investment deduction? Let's say for example that we want to produce a film: through the current Royal Decree-law, the government offers the film industry to benefit from tax savings, allowing the entry of national and international investors; a procedure that would ultimately translate into a stimulation for the country's economy. However, video games have been excluded from this measure, which hinders the creation of video games in Spain.

As explained by DEV: "This is a necessary measure to boost the entry of national and international investors

in video game projects developed in Spain, and whose great effectiveness has been widely demonstrated in the audiovisual sector, including animation and visual effects; so much that the Royal Decree-law published today increases the percentage of tax deduction for these productions from 30% to 20%"

"The Royal Decree-law has not included the video game industry in the investment deduction"

In this way, DEV continues: "The Royal Decree-Law approving support measures for the cultural sector approved today by the Council of Ministers, despite the reform of article 36 of the Corporation Tax Law, has not included the video game industry in the investment deduction in film productions, audiovisual series and live performances of performing and musical arts. "In countries such as The United Kingdom, Italy or France take the videogame sector into account in these tax incentives, "increasing your competitive advantage against Spain when it comes to attracting investments, projects, companies and human capital ".

Consequences and response from DEV

The Spanish Association of Companies Producing and Developing Video Games and Entertainment Software (DEV) maintains that This tax incentive has been requested from the Government for years., and is one of the star measures of the White Book on Spanish Video Game Development. "Its approval at this difficult time would allow the video game development industry to mitigate the impact of the COVID-19 crisis. which, according to a survey of the sector, could lead to a direct short-term loss of € 90 million in turnover and a significant slowdown in annual employment growth, equivalent to 500 jobs that will stop being generated in 2020"they argue from DEV.

In this way, they argue that if the crisis lasts for more than 3 months, 240 companies in the sector will be unable to continue operating

. "In this case, the direct loss of a third of the billing and employment of the sector, that is, up to 270 million euros and 2,300 jobsThe truth is that, at the beginning of the current crisis of COVID-19, DEV was already in charge of making a series of recommendations to the Government so that the impact of this situation would be as less bleeding as possible in the video game sector.

DEV outlined a series of recommendations to the Government to mitigate the impact of COVID-19 on the videogame sector in Spain

"DEV regrets the lack of sensitivity towards the sector and vindicates the importance of supporting the Spanish videogame development industry as it can represent an important engine of economic development and investment attraction for Spain in the recovery phase after the containment measures due to the COVID-19 crisis, " they conclude. "Thanks to the tax incentive it will be possible to launch important projects aimed at international markets, where it has been seen how video game consumption has increased significantly over the last few months. "

Government aid: € 70 million for the video game and technology industry

Although the sector is not part of the Royal Decree-law that refers to deductions from investors, the Government has approved an injection of 70 million euros that are intended to strengthen the sector. "It is a sector of increasing quantitative and qualitative importance in our country," the ministers noted. Alberto Garzn (Consumption) and Jos Manuel Rodrguez Uribes (Culture). The figure will be distributed as follows: 20 million will be destined to promote youth employment in the Spanish digital industry, where games like the acclaimed have been born GRAY (Nomada Studio) or Rhyme (Tequila Works); the remaining 50 million euros will be distributed as follows:

15 million will be destined to improve the technological offer in digital content.
35 million to development based on artificial intelligence and other enabling technologies.

In AEVI's latest reports, we found that the video game sector billed € 1479 million in 2019. At that time, Nadia Calvio – Third Vice President of the Government and Minister of Economic Affairs and Digital Transformation of Spain – expressed that the role of the video game in Spain is defined as "a priority sector of the digital economy, given its creative and intensive character in knowledge and technology ".