Cross-Country Evidence on the Preliminary Effects of Patent Box Regimes on Patent Activity and Ownership

Bradley, Sebastien; Dauchy, Estelle; Robinson, Leslie A.

doi:10.2139/ssrn.2681433

Cited by 6 publications

(16 citation statements)

References 17 publications

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“…Our empirical analysis accounts for this point by controlling for the host location of MNEs' parent firms. In terms of results, we, in line with Bösenberg and Egger (2017) and Gaessler, Hall, and Harhoff (2018), find evidence for patent ownership distortions toward low-tax countries, while our findings contrast Bradley, Dauchy, and Robinson (2015) who reject such a link.…”

Section: Patent Shifting To Low-tax Countriessupporting

confidence: 88%

“…The decision to split inventor and owner location is not thoroughly considered in existing empirical studies on patent shifting. Exceptions are papers by Bradley, Dauchy, and Robinson (2015), Bösenberg and Egger (2017), and Gaessler, Hall, and Harhoff (2018), which differ from our work in several respects, however. Bösenberg and Egger (2017) and Gaessler, Hall, and Harhoff (2018) consider patent ownership transfers to low-tax countries after the initial patent application, while we account for geographic splits at the time of the initial patent application.…”

Section: Patent Shifting To Low-tax Countriescontrasting

confidence: 84%

“…Some assess the impact on profit allocation within the multinational firm (see Chen et al 2019;Koethenbuerger, Liberini, and Stimmelmayr 2018) and others the effect on intrafirm payments (see Ohrn 2016). Closely related to our work, there is some evidence for patent ownership relocations to patent box countries after the introduction of patent box regimes (e.g., Alstadsaeter et al 2018); some studies, however, also reject such a link (e.g., Bradley, Dauchy, and Robinson 2015).…”

Section: Link To the Patent Box Literaturesupporting

confidence: 77%

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Corporate Taxes, Patent Shifting, and Anti-avoidance Rules: Empirical Evidence

Baumann

Boehm

Knoll

et al. 2020

Public Finance Review

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We empirically assess international corporate tax avoidance by strategic location of innovative output. The analysis draws on the universe of patent applications to the European Patent Office from 1990 to 2006 linked with data on multinational entities (MNEs) in Europe. Four findings emerge: first, patent holdings are distorted toward low-tax countries. Second, patent location in low-tax countries is correlated with a geographic separation of research and development output and input. Third, MNEs systematically sort high-value (low-value) patents to low-tax (high-tax) countries. Fourth, the propensity to locate patent ownership in low-tax countries is significantly decreased if controlled foreign company rules are enacted in the MNE’s parent country. The tightening of transfer pricing legislation, in turn, exerts a weak negative effect on the location of patent ownership only.

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Section: Patent Shifting To Low-tax Countriessupporting

confidence: 88%

Section: Patent Shifting To Low-tax Countriescontrasting

confidence: 84%

Section: Link To the Patent Box Literaturesupporting

confidence: 77%

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Corporate Taxes, Patent Shifting, and Anti-avoidance Rules: Empirical Evidence

Baumann

Boehm

Knoll

et al. 2020

Public Finance Review

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“…Thus, these regimes concentrate patents, yet there is a question whether these IP boxes stimulate research activities. Similar results have been presented in a study by Bradley et al (2015). Griffith et al (2014) mention one important aspect of intellectual property and its relation to tax planning: the fact that intellectual property shows the greatest mobility in a set of assets.…”

Section: Theoretical Backgroundsupporting

confidence: 83%

Tax Competition and IP Boxes after the Appliction of the Modified Nexus Approach

Jedlička¹

2018

JOC

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This article deals with intellectual property (IP) boxes as an important factor in tax competition and tax planning. IP payments are used for profit shifting within a group of companies to lower their tax burden. One of the latest important developments in the use of IP boxes is the changing attitude of the OECD and its nexus approach, the application of which influences taxation within an IP box, especially the treatment of expenditures. This paper focuses on the situation regarding IP boxes after the implementation of the modified nexus approach, with an emphasis on changing the tax burden. These changes affect tax planning, thus managers need to know how they affect the overall tax burden of a company's investments. As a measure of these changes, the effective average tax rate (EATR) was selected. This study concentrates on three countries which have applied this approach: Hungary, the Netherlands and the United Kingdom. The results indicate that there is a new dependence after the application of the modified nexus approach: the structure of IP expenditures. The implementation of nexus approach makes the statutory income tax rate important also for IP income, and it causes a higher tax burden on IP income in the case of a small share of IP qualifying expenditures. A significant importance of the statutory corporate tax rate for the taxation of IP income is shown by changes in EATRs related to IP income after a reduction in corporate tax rates in Hungary and in the United Kingdom in 2017.

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“…Similar to expenditure‐based tax incentives, income‐based tax incentives attract R&D investments by increasing the after‐tax income from the outputs of R&D (Bradley et al 2015). 8 Income‐based incentives include low tax rates on corporate income and reduced tax rates on income derived from intangible property.…”

Section: Background and Hypothesesmentioning

confidence: 99%

R&D Investments and Tax Incentives: The Role of Intra‐Firm Cross‐Border Collaboration*

Huang

Krull²,

Ziedonis

2020

Contemporary Accting Res

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U.S. multinational corporations increasingly use intra-firm, cross-border research collaboration to disperse R&D across different countries. This paper investigates the implications of such collaboration on the abilities of firms to garner benefits from R&D tax incentives. We find that the association between R&D intensity and tax incentives is three to five times larger when firms have extensive cross-border collaboration connected to a country. We also find that the effect is stronger when local intellectual property protection is weaker and when local innovation resources are higher. Our results suggest that cross-border collaboration helps firms achieve more tax-efficient R&D investments both by reducing the nontax frictions posed by weak intellectual property protection and by increasing the nontax benefits of foreign R&D.

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Cross-Country Evidence on the Preliminary Effects of Patent Box Regimes on Patent Activity and Ownership

Cited by 6 publications

References 17 publications

Corporate Taxes, Patent Shifting, and Anti-avoidance Rules: Empirical Evidence

Corporate Taxes, Patent Shifting, and Anti-avoidance Rules: Empirical Evidence

Tax Competition and IP Boxes after the Appliction of the Modified Nexus Approach

R&D Investments and Tax Incentives: The Role of Intra‐Firm Cross‐Border Collaboration*

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