There is concern amongst policy makers that companies have some discretion over the location of their intellectual property, independently of where the IP was generated, and therefore may benefit from low tax rate jurisdictions. This research project investigates the extent to which corporate taxation affects the location of the ownership of patents within a multinational group. The research exploits a unique dataset which links patent data from the European Patent Office to accounting data for European companies between 1995 and 2003. The results suggest that the host country’s corporate tax rate exerts a large negative effect on the number of patents filed by the subsidiary of a multinational company. In addition, binding ‘Controlled Foreign Company’ rules tend to reduce the number of patent applications.
Nadine Riedel
