The European Commission has approved the extension of a tax credit for the video game sector which was announced in Budget 2026.
The Digital Game Tax Credit was originally launched in November 2022 but was expanded in last October’s budget to include post-release content.
This was done to recognise that games continue to evolve long after their launch, with new levels, features, updates and downloadable content forming an important part of game development.
The measure offers companies developing digital games a tax credit of up to 32% per qualifying game.
However, after it was launched take up of the tax credit had been slow amid claims by game studios that its structure was limiting and that reforms were needed to unlock its full potential.
“I welcome the European Commission’s approval of this important expansion of the Digital Games Tax Credit,” said Tánaiste and Minister for Finance Simon Harris.
“Modern games don’t stop evolving on launch day, and it’s important our tax system keeps pace with the way the industry works today.”
“Extending the credit to eligible post-release development means we are supporting studios through the life of a game, not just until its initial release,” Mr Harris said.
The global video game industry is now worth more than the music and film sectors combined, with the estimated value expected to reach over $385bn (€327bn) in the coming years.
It is thought that Ireland’s digital gaming sector could be worth around €250 million.
Minister for Culture, Communications and Sport, Patrick O’Donovan said the extension of the tax credit recognises and supports the considerable creative work that continues long after the release of a game.
“This is a significant indicator of this government’s support for the digital games industry in Ireland,” Mr O’Donovan said.
