Abstract
Firms can make use of the discretionary aspect of the location of patent ownership to avoid taxation and maximise their profits. This paper investigates patent transfers with regard to patent box regimes, and study how firms' incentives to relocate patents vary with the heterogeneity of the features of such regimes. Using a comprehensive dataset on international patent transfers, I find that patent box countries significantly attract more patent relocations, and that incoming flows increase in the tax rebate. The fiscal incentives are stronger in countries with a high R&D level, suggesting multiple dimensions in firms' decisions of patent relocation. This is all the more true for more valuable patents. I distinguish between intra-group relocation and patent trade. The results indicate that policy makers could tweak the designs of patent box regimes and the stringency of the rules governing patent transfers to deter relocation driven solely by fiscal optimization motives. Finally, I propose a novel instrument to address the potential endogeneity of R&D expenditures.
