Patent Boxes Design, Patents Location, and Local R&D

Patent boxes have been heavily debated for their role in corporate tax competition. This paper uses firm-level data for the period 2000–12 for the top 2,000 corporate research and development investors worldwide to consider the determinants of patent registration across a large sample of countries. Importantly, we disentangle the effects of corporate income taxation from the tax advantage of patent boxes and exploit a new and original dataset on patent box features such as the conditionality on performing research in the country or their coverage. We find that patent boxes have a considerable effect on attracting patents, mostly because of their favourable tax treatment. Patents with high earnings potential are particularly sensitive. Patent boxes with a large coverage also have stronger effects on the location of patents. We also analyse the impact of patent boxes and their tax advantages on local R&D activities and find that R&D development conditions tend to attenuate the dominant fiscal effect of patent boxes.

ALSTADSÆTER Annette;  BARRIOS Salvador;  NICODEME Gaetan;  SKONIECZNA Agnieszka Maria;  VEZZANI Antonio; 

2018-10-09

WILEY-BLACKWELL

JRC98780

0266-4658 (online),   

https://academic.oup.com/economicpolicy/article/33/93/131/4833998,    https://publications.jrc.ec.europa.eu/repository/handle/JRC98780,   

10.1093/epolic/eix021 (online),