Tax Losses and Ex-Ante Offshore Transfer of Intellectual Property

Rishi Sharma, Joel Slemrod and Michael Stimmelmayr

No 31452, NBER Working Papers from National Bureau of Economic Research, Inc

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. Our analysis highlights two major aspects of this decision. First, an asymmetric treatment of project gains and losses in the home country creates an incentive to transfer IP to a foreign lowtax country to avoid potentially negative profits at home. These incentives exist even when IP is priced at a fair arms-length price and are further strengthened in the presence of R&D tax incentives. Second, when multinationals have private information about the probability of project success, they have an incentive to transfer their most promising IP ex ante.

JEL-codes: H25 (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-ipr, nep-ppm and nep-pub
Note: PE
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Citations: View citations in EconPapers (1)

Published as Rishi R. Sharma & Joel Slemrod & Michael Stimmelmayr, 2023. "Tax losses and ex-ante offshore transfer of intellectual property," Journal of Public Economics, vol 226.

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Journal Article: Tax losses and ex-ante offshore transfer of intellectual property (2023)
Working Paper: Tax Losses and Ex-Ante Offshore Transfer of Intellectual Property (2021)
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