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Corporate Taxation and the Choice of Patent Location within Multinational Firms

  • Tom Karkinsky

    ()

    (Oxford University Centre for Business Taxation)

  • Nadine Riedel

    ()

    (Oxford University Centre for Business Taxation)

This paper investigates whether corporate taxation affects the location of patents within a multinational group. We exploit a unique dataset which links patent data from the European Patent Office to micro panel data on European firms for 1995-2003. Our results suggest that the host country’s corporate tax rate exerts a negative effect on the number of patents filed by a multinational subsidiary. The effect is statistically significant and quantitatively large and turns out to be robust against controlling for affiliate size. The findings prevail if we additionally account for royalty withholding taxes. Moreover, binding ‘Controlled Foreign Company’ rules tend to decrease the number of patent applications.

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Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 0914.

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Date of creation: 2009
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Handle: RePEc:btx:wpaper:0914
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  1. Dischinger, Matthias & Riedel, Nadine, 2011. "Corporate taxes and the location of intangible assets within multinational firms," Journal of Public Economics, Elsevier, vol. 95(7), pages 691-707.
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