Italy introduces tax break for game studios

The Italian minister of culture has announced a tax break that will cover 25% of development costs up to €1 million for video game studios. 

The companies which are subject to taxation in Italy and have headquarters in the European Economic Area will have a chance to be eligible for the tax break. 

The tax break plan has been submitted to the European Commission for approval, per European Union law, before being fully operational. 

Italy’s Minister of Culture, Dario Franceschini, said: “Video games are the fruit of creative genius, and it is right that, as in the case of cinema and audiovisuals, they should receive support if they are recognized as works of particular cultural value.”

“In Italy, the sector is growing exponentially, with numerous start-ups by under-30s capable of developing high-quality products, attracting major international productions and nurturing young talent. These are true creative workshops, which deserve every support and can contribute to new ways of knowing and learning.”

According to the annual Italian games industry census, revealed by Italian Interactive Digital Entertainment Association (IIDEA), Italy’s game industry grew 45% from 2018 to 2021 to more than 1,600 developers and 160 game studios. 26% of those studios generate more than €500,000 in revenue, while a third of them now have more than 10 employees. 

Overall revenues for the Italian games market were $2.65 billion in 2019, up 21.9% from 2018. The Italian industry produces games for the international market, which accounts for 94% of the revenue. Europe is the main target market with 60% of revenues, followed by North America with 25%.

In mid May, Italy’s competition watchdog fined Google 102 million euros ($123 million) for abusing its dominance in the mobile app market. 

“Through android and the app store Google Play, Google has a dominant position which allows it to control the reach app developers have on final users,” the antitrust regulator said in a statement.”