Spillover from the Haven: Cross-Border Externalities of Patent Box Regimes Within Multinational Firms

In this paper, the authors analyze the cross-border effects of patent box regimes that reduce the tax rate on income from intellectual property. The authors argue that the tax cut in one location of a multinational enterprise may reduce the user cost of capital for the whole group if profit shifting is possible. This spillover effect of the foreign tax cut raises domestic R&D investment. 

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By Schwab, Thomas; and Todtenhaupt, Maximilian, posted on Tuesday December 26, 2017

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