Last week the Polish Ministry of Culture and National Heritage presented a draft of the long-announced ‘Act on financial support for the production of cultural video games’. The proposed act provides the rules of financial support for video game producers by means of tax exemptions for video games promoting Polish or European cultural heritage. The act aims to improve the conditions of the functioning of the video game production market in Poland and to create the conditions for cooperation between Polish and foreign producers.
Scope of the support
The planned tax relief will be available both to video game producers with their registered office in Poland and to EU-based game producers, provided that the latter have a branch in Poland and that the video game subject to the relief will be produced by this branch.
The proposed act introduces the notion of a “cultural video game” which should be understood as a video game that (i) refers to the cultural heritage of Poland or Europe, (ii) is of a culture-formative or innovative character, (iii) meets the qualification cultural test confirmed by two subsequent certificates issued by the Minister of Culture, and (iv) is intended for commercial distribution.
Video games that will not be eligible for the relief are those of an advertising or promotional nature, gambling games, video games with pornographic content and video games not intended for public sale. The planned support will be available only for video games with an eligible production cost of at least PLN 100,000 (approx. EUR 25,000). The amount of support together with other sources of public aid financing may not exceed 50% of the total production costs. The proposed support process will be composed of two phases – the first one will take place before the start of the production of the game and the second once the production is completed.
The first phase
Pursuant to the proposed act, a producer intending to obtain the tax relief will be obliged to submit an application before the start of the production of the game. Such application must contain, among other things, a completed qualification (cultural) test and appropriate documentation, such as a cost estimate, production schedule and confirmation of the acquisition of economic copyrights to the script or the literary basis of the video game. The entity responsible for the verification of the application will be the Minister of Culture.
The admissibility of granting relief to a given project will be considered individually on the basis of the so-called cultural test. The test will assess whether the video game meets the following criteria:
- It makes reference to the cultural heritage of Poland or Europe;
- It is culture-formative or has an innovative character;
- The development takes place in Poland; and
- The development involves participation of Polish or European experts.
If the video game receives at least half of all possible points in the test, including at least half of the points related to the points (i) and (ii) above, the producer will obtain a temporary certificate – a document enabling him/her to take advantage of the tax relief.
The second phase
Once the production of the video game is completed, the producers will be obliged to submit a final report in order to settle the financial support. The report must contain, among other things, a description of the course of the individual stages of game development, data on production costs and the completed, updated cultural test. Together with the report, the entrepreneur will be obliged to provide, free of charge, one copy of the video game and a copy of the materials related to the production of the game.
After the positive verification of the final report, the Minister will issue a final certificate confirming that the video game meets the conditions for its recognition as a cultural game and the tax relief granted to the producer. The final certificate will be valid indefinitely. The proposed regulation also includes the possibility of carrying out inspections of producers with respect to documentation regarding the granted tax relief.
Next steps
The proposed Act is currently undergoing public consultations which will last until 26 October 2018. The full text of the act (in Polish) is available to read here.
