Patent Boxes Design, Patents Location and Local R&D

42 Pages Posted: 29 Jun 2015

See all articles by Annette Alstadsæter

Annette Alstadsæter

School of Economics and Business, NMBU

Salvador Barrios

European Commission, JRC - IPTS

Gaëtan Nicodème

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management; CEPR and CESifo The views expressed in the article are those of the author and should not be attributed to the European Commission.

Agnieszka Maria Skonieczna

European Union - European Commission

Antonio Vezzani

ESC Rennes School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: June 2015

Abstract

Patent boxes have been heavily debated for their role in corporate tax competition. This paper uses firm-level data for the period 2000-2011 for the top 2,000 corporate research and development (R&D) 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. We also exploit a new and original dataset on patent box features such as the conditionality on performing research in the country, and their scope. We find that patent boxes have a considerable effect on attracting patents, mostly because of their favourable tax treatment, especially for high-quality patents. Patent boxes with a large scope in terms of tax base definition also have stronger effects on the location of patents. The size of the tax advantage offered through patent box regimes is found to deter local innovative activities, whereas R&D development conditions tend to attenuate this adverse effect. Our simulations show that, on average, countries imposing such development conditions tend to grant a tax advantage that is slightly greater than optimal from a local R&D impact perspective.

Keywords: corporate taxation, location, nexus approach, patent boxes, patents, R&D

JEL Classification: F21, F23, H25, H73, O31, O34

Suggested Citation

Alstadsaeter, Annette and Barrios, Salvador and Nicodeme, Gaetan and Skonieczna, Agnieszka Maria and Vezzani, Antonio, Patent Boxes Design, Patents Location and Local R&D (June 2015). CEPR Discussion Paper No. DP10679, Available at SSRN: https://ssrn.com/abstract=2624634

Annette Alstadsaeter (Contact Author)

School of Economics and Business, NMBU ( email )

Norwegian University of Life Sciences
As
Norway

HOME PAGE: http://https://sites.google.com/view/annettealstadsater/start

Salvador Barrios

European Commission, JRC - IPTS ( email )

Edificio Expo
C/ Inca Garcilaso s/n
Seville, 41092
Spain
34 954 48 82 08 (Phone)
34 954 48 82 08 (Fax)

Gaetan Nicodeme

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

50 Avenue Roosevelt
Brussels 1050
Belgium

CEPR and CESifo The views expressed in the article are those of the author and should not be attributed to the European Commission.

No Address Available

Agnieszka Maria Skonieczna

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

Antonio Vezzani

ESC Rennes School of Business ( email )

Rue Robert d'arbrissel, 2
Rennes, 35000
France

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