Patent Boxes Design, Patents Location and Local R&D

41 Pages Posted: 6 Jul 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

European Commission, Joint Research Centre, Institute for Prospective Technological Studies

Multiple version iconThere are 2 versions of this paper

Date Written: June 29, 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, patent boxes, location, patents, R&D, nexus approach

JEL Classification: F210, F230, H250, H730, O310, O340

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 29, 2015). CESifo Working Paper Series No. 5416, Available at SSRN: https://ssrn.com/abstract=2627085

Annette Alstadsaeter

School of Economics and Business, NMBU ( email )

P.O. Box 5003
NO-1432 Aas
Norway

HOME PAGE: http://www.nmbu.no/emp/annette.alstadsater

Salvador Barrios (Contact Author)

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

European Commission, Joint Research Centre, Institute for Prospective Technological Studies ( email )

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