Intellectual property box regimes: effective tax rates and tax policy considerations
By H. Miller, Lisa Evers, C. Spengel. International Tax and Public Finance, 2013
170 citations recorded by the source corpus.
In 2014, 12 European countries are operating Intellectual Property (IP) Box regimes that provide substantially reduced rates of corporate tax for income derived from important forms of intellectual property. We describe the key features of the policies and incorporate them into forward-looking measures of the cost of capital and the effective average tax rate. We show that the treatment of expenses relating to IP income is particularly important in determining the effective tax burden. A key finding is that regimes that allow expenses to be deducted at the ordinary corporate income tax rate, as opposed to the lower IP Box tax rate, may result in negative effective average tax rates and can thereby provide a subsidy to unprofitable projects. We discuss the ways in which IP Boxes are likely to affect firms’ decisions and relate this to possible policy aims. While some regimes attempt to link the tax benefit to real activities, others have designed a policy targeted at the income streams associated with intellectual property. A key concern is the role that IP Boxes may play in increased tax competition between European countries.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/8b747525ffe328d061b1b64ccb6c8936e4d1633a
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In Accounting
In Economics and Econometrics
- H. Miller
- G. Nicodème
- Annette Alstadsæter
- Rachel Griffith
- M. O'Connell
- Salvador Barrios
- Agnieszka Maria A.M. Skonieczna
- Antonio Vezzani
Citations in the corpus
- Ownership of intellectual property and corporate taxation (2014, background): “8 Evers et al. (2013) provide further details on the policies and incorporate the rules into”
- Patent Boxes Design, Patents Location and Local R&D (2015, background): “For instance, Evers et al. (2014) find that the treatment of expenses relating to IP income is generally more decisive for the effective tax burden than the nominal IP Box tax rate.”