Tax Losses and Ex-Ante Offshore Transfer of Intellectual Property

36 Pages Posted: 31 Aug 2021

See all articles by Rishi Sharma

Rishi Sharma

Colgate University - Economics Department

Joel Slemrod

University of Michigan at Ann Arbor

Michael Stimmelmayr

University of Bath - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: 2021

Abstract

We develop a positive model of multinational firm behavior and analyze a firm’s incentive to transfer an intellectual property (IP) right of uncertain value offshore ex ante, i.e. before its success or failure is realized. With an asymmetric treatment of losses in the home country, the multinational firm will transfer its IP to a foreign low-tax country to avoid potentially negative profits at home. In addition, similar incentives exist to transfer the IP to a jurisdiction where tax rates are comparable or even higher than at home if the foreign jurisdiction offers a more symmetric treatment of losses.

JEL Classification: H250, H260, D210, F230

Suggested Citation

Sharma, Rishi and Slemrod, Joel and Stimmelmayr, Michael, Tax Losses and Ex-Ante Offshore Transfer of Intellectual Property (2021). CESifo Working Paper No. 9262, Available at SSRN: https://ssrn.com/abstract=3912372 or http://dx.doi.org/10.2139/ssrn.3912372

Rishi Sharma (Contact Author)

Colgate University - Economics Department ( email )

13 Oak Drive
Hamilton, NY 13346
United States

Joel Slemrod

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Michael Stimmelmayr

University of Bath - Department of Economics ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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