Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339281 
Year of Publication: 
2026
Series/Report no.: 
EERI Research Paper Series No. 04/2026
Publisher: 
Economics and Econometrics Research Institute (EERI), Brussels
Abstract: 
We find that patents registered by multinational enterprises (MNEs) in tax havens help avoid taxes in the EU but fail to increase the total factor productivity (TFP) of EU-located group members. We conclude that many of those patents' prime purpose is not to make technology available and then diffuse it smoothly within the group. It is rather to avoid taxes in the EU by shifting profits to low-tax offshore entities. We suggest that implementing a comprehensive system of withholding taxes on outbound royalty payments could reduce profit-shifting associated with patents, thereby fostering more innovative and efficient uses of intellectual property.
Subjects: 
Multinational enterprises
taxes
TFP
innovation
JEL: 
D24
F38
H21
H25
O32
Document Type: 
Working Paper

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