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Tax attractiveness and the location of patents

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  • Dinkel, Andreas
  • Schanz, Deborah

Abstract

This paper analyzes the impact of taxation on the location of patents within multinational groups. Based on groups with parents from 36 countries globally and their patent holdings in 36 European countries, we provide insight into the determinants of three subsequent decisions: (1) the decision of whether to locate patents abroad; (2) in which countries to locate patents; and (3) how many patents to locate in each country. Our findings indicate that multinationals take the tax attractiveness of countries into account when making these decisions. Specifically, we show that the statutory tax rate, the taxation of royalties, R&D incentives, and transfer pricing rules help to explain the patent-location choices of multinationals.

Suggested Citation

  • Dinkel, Andreas & Schanz, Deborah, 2015. "Tax attractiveness and the location of patents," arqus Discussion Papers in Quantitative Tax Research 188, arqus - Arbeitskreis Quantitative Steuerlehre.
    • Handle: RePEc:zbw:arqudp:188
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    References listed on IDEAS

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    3. Karkinsky, Tom & Riedel, Nadine, 2012. "Corporate taxation and the choice of patent location within multinational firms," Journal of International Economics, Elsevier, vol. 88(1), pages 176-185.
    4. John Mutti & Harry Grubert, 2009. "The Effect of Taxes on Royalties and the Migration of Intangible Assets Abroad," NBER Chapters, in: International Trade in Services and Intangibles in the Era of Globalization, pages 111-137, National Bureau of Economic Research, Inc.
    5. Christof Ernst & Katharina Richter & Nadine Riedel, 2014. "Corporate taxation and the quality of research and development," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 694-719, August.
    6. Gaétan de Rassenfosse & Hélène Dernis & Geert Boedt, 2014. "An Introduction to the Patstat Database with Example Queries," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 47(3), pages 395-408, September.
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    12. Harhoff, Dietmar & Hoisl, Karin, 2007. "Institutionalized incentives for ingenuity--Patent value and the German Employees' Inventions Act," Research Policy, Elsevier, vol. 36(8), pages 1143-1162, October.
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    More about this item

    Keywords

    International taxation; Tax attractiveness; Intellectual property; Location decision; Multinational enterprise;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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