Thinking outside the box: The cross-border effect of tax cuts on R&D

Thomas Schwab and Maximilian Todtenhaupt

Journal of Public Economics, 2021, vol. 204, issue C

Abstract: We analyze how a reduction of the tax rate on corporate income from intellectual property (IP) in one country, known as a patent box regime, affects corporate R&D activity in other countries. Combining data on patents and multinational corporation networks, we show that the cross-border effect of tax policy changes depends on whether co-location of the IP and the underlying R&D activity is required. Patent boxes without such a requirement increase patent output in other countries. Patent boxes with such a requirement reduce patent output abroad but only when relocation costs for R&D activity are small.

Keywords: Taxation; Cross-border; Innovation; Multinational corporations (search for similar items in EconPapers)
JEL-codes: F23 H25 O31 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:204:y:2021:i:c:s0047272721001729

DOI: 10.1016/j.jpubeco.2021.104536

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