The games industry in the UK is on the brink of having any chance of future tax breaks taken away, with European wide tax relief for the industry set to expire in 2012.

France has already been dealt the biggest blow: its tax incentives have already expired and it looks as though the EU has no plans to renew the exception that allows games developers up to 20 per cent off of their tax.

If this turns out to be the case then, according to Develop, tax incentives for games developers across the whole of the European Union will be dropped, meaning the UK will not be able to claim this break either, something it was hoping to do.

UK gaming decline

The games industry in the UK is already a fragile one, with TIGA quoting that as many as 10 per cent of the workforce that used to be based in the UK have now gone overseas – the reason being better incentives, including tax breaks.

Those countries that have embraced the games industry have flourished as a result, with the likes of Canada thriving when it comes to games development.

According to Develop, one big games producer, Quantic Dream – which made Heavy Rain and is based in France – has threatened to go overseas as a result of the EU not renewing its tax incentive deal.

Guillaume de Fondaumiere, the co-CEO of Quantic Dream, said to the European Commission (EC) about the situation, "The abandonment of this flagship measure, which brings hope to a large number of European studios and which has demonstrated its effectiveness in France, would be an historic mistake."

According to a spokesperson for the EC, no decision has yet been made on the future of the gaming tax breaks. Watch this space.

Via Develop and CVG