The Impact of Intangible Assets’ Mobility on Intangibles Location and Income Shifting: Trademarks vs. Patents

41 Pages Posted: 18 Aug 2022 Last revised: 25 Mar 2024

See all articles by Lisa De Simone

Lisa De Simone

University of Texas at Austin

Cinthia Valle Ruiz

Catholic University of Lille - IESEG School of Management

Johannes Voget

University of Mannheim

Date Written: March 8, 2024

Abstract

Despite multilateral efforts to combat profit shifting, recent literature finds that firms with higher ratios of intangible assets shift more income. Prior research primarily focuses on the role of patents and R&D expenditures due to data availability, which could distort estimates of the role of IP in income shifting if patenting firms exhibit a different propensity to shift income than firms with other types of IP. We estimate a mixed logit model and find that trademarks’ tax elasticities are larger than those for patents, leading to greater income shifting. We further provide evidence that agglomeration effects reduce the tax elasticity of patents, which aligns with theory that trademarks can be more mobile than patents. Country-level policies that do not allow the separation of legal versus economic ownership exacerbate these effects. We suggest that policy makers and local tax administrations could curb profit shifting by devoting more attention and resources to the role of trademarks.

Keywords: intangible assets, patents, trademarks, tax planning, income shifting

JEL Classification: H25, F23, H26, H3

Suggested Citation

De Simone, Lisa and Valle Ruiz, Cinthia and Voget, Johannes, The Impact of Intangible Assets’ Mobility on Intangibles Location and Income Shifting: Trademarks vs. Patents (March 8, 2024). Available at SSRN: https://ssrn.com/abstract=4188135 or http://dx.doi.org/10.2139/ssrn.4188135

Lisa De Simone

University of Texas at Austin ( email )

2110 SPEEDWAY
Stop B6400
Austin, TX 78705
United States

HOME PAGE: http://www.lisa-desimone.com

Cinthia Valle Ruiz (Contact Author)

Catholic University of Lille - IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

Johannes Voget

University of Mannheim ( email )

L 7, 3-5
Mannheim, 68161
Germany

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