A Closer Look at Ireland’s Flourishing Video Game Industry
Video game companies that set up offices in Ireland are now reaping the rewards of a business strategy originally considered for tax reduction purposes. While the gaming industry in general has been enjoying growth despite the pandemic outbreak, among the biggest earners are companies that shifted some of its operations in Northern Ireland.
Aside from the tax shields and tax credits, the country’s video games market has been experiencing phenomenal growth since 2020.
Irish Consumers are Now Spending More on Video Games
A market research report from Statista showed that Irish consumers have increased their spending on video games, the industry is currently experiencing impressive growth in terms of sales. Prior to the pandemic, video game revenues have been constantly growing at an annual rate of 5.2%. Yet the strong demand for video games in 2020 boosted revenue growth to €91 million. As the growth trend continues, revenue is estimated to hit €112 million by the year 2024.
Actually, the news journal The Independent already took notice in 2014 that video gaming in Ireland was already showing an upward trend. At that time, much of the increased interests in video games were coming from Ireland’s esports gamers and enthusiasts. However, the larger portion of the gaming revenues did not actually go to Ireland.
Ireland’s “Double Irish” Tax Tool
The Double Irish tax scheme introduced by European countries as a way to lure foreign businesses to set up shop in their soil was banned by the European Union in 2015. The scheme though is still in effect in Ireland and other non-EU member countries.
The Double Irish Tax Scheme(/strong) is actually a tax strategy available to multinational companies looking to reduce tax liabilities in their country of origin. In a Double Irish arrangement, the multinational companies need only to set up part of their business in a country offering the Double Irish tax tool. That way, they can shift some of their profits in the foreign country that imposes lower tax rates.
The term Double Irish is used because the tax strategy requires the Irish subsidiary to first register its tax residency in a tax haven country like Switzerland or the Cayman Islands.
Overtime, the tax tool worked wonders for many tech companies, particularly the video games development industry. The Independent cited Riot Games as an example, which started out as a local tech support for irish players engaged in Riot’s massive multiplayer online role playing games (MMORPG.)
The company later recruited and trained Irish talents to develop skills in designing, programming and publishing game content. Eventually Riot Games evolved into becoming a branch in which engineers, developers and publishers contributed to the tech giant’s overall gaming operations.
However, training local talents also posed as a setback for the company as some of the people they trained ventured into setting up their own video gaming business in Ireland. Somehow, the Double Irish scheme became a win-win situation for Ireland.
The indie Irish gaming companies proved instrumental in giving the country’s video gaming industry a boost. They developed games that met the gaming preferences of both young and adult Irish gamers. To date, there are nine home-grown video game companies in Ireland, which the Irish government supports with numerous tax credits, particularly for costs incurred in the development of video games.
The additional benefit is that other businesses like the gaming chair sector, are also benefiting from the popularity of video gaming. Households now recognize the importance of gaming chairs not only for their gaming pleasure but also for work-from-home and educational purposes.
As an aside inasmuch as gaming chairs have proliferated in Ireland as well, the website gaming chairs ireland have a large range of choices that have been tested by experts and reviewed by satisfied consumers.