Should There Be Lower Taxes On Patent Income?

Fabian Gaessler, Bronwyn Hall and Dietmar Harhoff ()
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Fabian Gaessler: MPI-IC Munich

No 177, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: A "patent box" is a term for the application of a lower corporate tax rate to the income derived from the ownership of patents. This tax subsidy instrument has been introduced in a number of countries since 2000. Using comprehensive data on patents filed at the European Patent Office, including information on ownership transfers pre- and post-grant, we investigate the impact of the introduction of a patent box on international patent transfers, on the choice of ownership location, and on invention in the relevant country. We find that the impact on transfers is small but present, especially when the tax instrument contains a development condition and for high value patents (those most likely to have generated income), but that invention itself is not affected. This calls into question whether the patent box is an effective instrument for encouraging innovation in a country, rather than simply facilitating the shifting of corporate income to low tax jurisdictions.

Keywords: patent box; ip box; innovation tax; beps; epo; invention incentive; patent ownership (search for similar items in EconPapers)
JEL-codes: H32 K34 O34 (search for similar items in EconPapers)
Date: 2019-08-05
New Economics Papers: this item is included in nep-acc, nep-eur, nep-ino, nep-ipr and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Should there be lower taxes on patent income? (2021)
Working Paper: Should there be lower taxes on patent income? (2018)
Working Paper: Should There Be Lower Taxes on Patent Income? (2018)
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