Data suggests that while the existence of a patent box regime incentivizes multinationals to shift the location of their patents, the shift is usually not accompanied by an increase in research activities or in the number of inventors located there, a June 18 European Commission report concludes.
In fact, according to the report, “the size of the tax advantage is negatively correlated with the local R&D.”
In reaching their conclusions, the authors analyzed data on 2,000 corporate R&D investors from 2000-2011, which together account for about 90% of global business R&D spending,.
The report also states that the addition of R&D development conditions in a patent box regime, such as those consistent with the nexus approach under discussion by the OECD and EU, have “the potential to decrease the still dominant tax effects of patent boxes on patent location and to raise the level of local inventorship.”
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