Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/336789 
Authors: 
Year of Publication: 
2026
Series/Report no.: 
arqus Discussion Paper No. 312
Publisher: 
Arbeitskreis Quantitative Steuerlehre (arqus), Berlin
Abstract: 
Exploiting granular European innovation data and the introduction of nexus requirements to patent boxes, I find that tightening access to preferential tax treatment of innovation output reduces inventive activity. A stylized framework and firm-reported constraints both point to internal funding as the binding mechanism. Consistently, effects appear on both the extensive margin, lowering the number of innovating firms, and the intensive margin, reducing resources devoted to innovation. Externally organized innovation declines relative to in-house activity, and innovation quality declines modestly. Spillover analyses indicate innovation decreases reflect forgone rather than reallocated innovation. Findings inform tax policy design and corporate innovation strategies.
Subjects: 
nnovation
International Taxation
Patent Box
Nexus Requirements
Document Type: 
Working Paper

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