Patent Boxes and the Relocation of Intellectual Property

37 Pages Posted: 31 Mar 2017

See all articles by Laurie Ciaramella

Laurie Ciaramella

Max Planck Institute for Innovation and Competition

Date Written: March 30, 2017

Abstract

Firms can make use of the discretionary aspect of the location of patent ownership to avoid taxation and maximise their profits. This paper investigates patent transfers with regard to patent box regimes, and study how firms' incentives to relocate patents vary with the heterogeneity of the features of such regimes. Using a comprehensive dataset on international patent transfers, I find that patent box countries significantly attract more patent relocations, and that incoming flows increase in the tax rebate. The fiscal incentives are stronger in countries with a high R&D level, suggesting multiple dimensions in firms' decisions of patent relocation. This is all the more true for more valuable patents. I distinguish between intra-group relocation and patent trade. The results indicate that policy makers could tweak the designs of patent box regimes and the stringency of the rules governing patent transfers to deter relocation driven solely by fiscal optimization motives. Finally, I propose a novel instrument to address the potential endogeneity of R&D expenditures.

Keywords: market for technologies, patent boxes, patent

JEL Classification: O34, F23, H32

Suggested Citation

Ciaramella, Laurie, Patent Boxes and the Relocation of Intellectual Property (March 30, 2017). Available at SSRN: https://ssrn.com/abstract=2943435 or http://dx.doi.org/10.2139/ssrn.2943435

Laurie Ciaramella (Contact Author)

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

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