Rockstar Games receives $77 million tax credit for RDR2, GTA 6

Rockstar Games' UK studio has received over $77 million in relief throughout 2019 and 2020, likely to help offset high costs of developing games like Red Dead Redemption 2 and the new GTA 6.

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According to new reports from Tax Watch, Rockstar North received £56.6 million (roughly $77 million) from the UK's Video Game Tax Relief fund throughout 2019 and 2020. Rockstar received nearly 50% of all VGTR relief during the period.

As outlined in previous articles, Rockstar North is carefully managed to make the most of this relief. The UK-based Rockstar studio makes very little operating profit and pays lower taxes as a result. The VGTR fund adds notional costs (that is, estimated costs) to help inflate Rockstar North's overall taxable costs and losses so it can quality for credits. The HMRC (the UK's version of the IRS) offers a cash payment for losses at a 25% rate.

The Video Game Tax Relief subsidizes overall game development costs by up to 20% of total core production costs.

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Throughout 2020, Tax Watch notes that Rockstar North earned £9.5 million in operating profit, a stark contrast to the $710.463 million earned from Grand Theft Auto games during the period.

Rockstar North received £56,684,144 from VGTR, which inflated taxes to £65,155,510. Taxation has been an asset on Rockstar North's accounts since 2016.

"With Rockstar accounting for £136.6m of VGTR by March 2020, a company with fewer than 1% of the games qualifying for VGTR is set to capture over 30% of the total subsidy."