Taxation and the Global Allocation of Intangibles

Jesse LaBelle, Fernando Martin and Ana Maria Santacreu

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

Abstract: We study how international tax systems shape the global allocation of intangible assets. Firm-level data show that cross-border patent ownership transfers respond strongly to tax differentials, especially within multinational firms, while arm’s-length transfers are more closely associated with intellectual property rights (IPR) protection. We develop a model in which patent owners choose whether to license, sell, or transfer patents to a foreign affiliate, linking tax rates, IPR protection and transfer-pricing wedges to patent location. Counterfactuals suggest that tax harmonization and stronger enforcement reduce profit shifting and expand the US royalty tax base, whereas a global minimum tax has limited effects.

Keywords: intangibles; cross-border patent sales; licensing; profit shifting; intellectual property rights; taxation; tax harmonization; global minimum tax (search for similar items in EconPapers)
JEL-codes: F12 O33 O41 O47 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2025-09-29, Revised 2026-05-21
New Economics Papers: this item is included in nep-acc, nep-bec, nep-ipr, nep-pbe and nep-pub
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DOI: 10.20955/wp.2025.025

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