Beiträge zur Jahrestagung des Vereins für Socialpolitik 2017: Alternative Geld- und Finanzarchitekturen - Session: Foreign Direct Investment II D14-V2
We analyze cross-border externalities of patent box regimes. Tax cuts in one location of a MNE reduce the user cost of capital for the whole group if they have no nexus requirement. This spillover effect of foreign tax cuts raises domestic R&D activity. The implementation of a patent box in an affiliate country of a MNE, increases domestic R&D by about 1% per implied tax rate differential. Furthermore, patent boxes generate negative spillovers on average patent quality.