Taxation and the Global Allocation of Intangibles

Jesse LaBelle, Fernando M. Martin and Ana Maria Santacreu
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Fernando M. Martin: https://www.stlouisfed.org/research/economists/martin

No 2025-025, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We study how international tax regimes and intellectual property (IP) rights shape the global allocation of intangible assets. Using a new dataset of cross-border patent transactions, we find that tax differentials are a key determinant of intra-firm transfers within multinational companies. Stronger IP rights play a bigger role in inter-firm transactions. To interpret these patterns, we develop a model in which firms choose to license, sell, or profit-shift patents depending on tax wedges and differences in IP protection. The theory rationalizes these findings and highlights how differences in global taxation and IP rights jointly determine the movement of intangible assets across borders.

Keywords: intangibles; cross-border patent sales; licensing; profit shifting; taxation; intellectual property rights (search for similar items in EconPapers)
JEL-codes: F12 O33 O41 O47 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2025-09-29
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DOI: 10.20955/wp.2025.025

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