Patent Transfers and Profit Shifting of Multinational Firms

Project Details

Description

This research project aims to shed new light on how multinational enterprises (MNEs) engage in profit shifting via the (re-)location of patents, one of the fundamental components of the firms' IP. Until recently, scholars often employed intangible assets as a rather broad measure of IP. Only few studies make use of patent data, but simply rely on differences between a patent's invention and (initial) application location. However, such a static treatment of patent ownership may underestimate the true shifting response. To confront these empirical challenges, we will construct patent-specific ownership chains over time and link information on patent applications (PATSTAT) to firm-level ownership data (Orbis). Specifically, we propose to follow patents over their entire lifetime and classify changes in patent ownership according to a geographical (i.e., within- versus between tax jurisdictions) and a relational (i.e., internal versus external) dimension. We then assess how MNEs allocate patents among their subsidiaries and hence, are able to shift profits towards entities located in low(er)-tax jurisdictions. In addition, we account for two dimensions of patents' characteristics, their value and complexity, which are expected to significantly determine the attractiveness of a patent as profit shifting vehicle. To identify the causal impact of taxation on the location of patents within MNEs we will draw on quasi-experimental variation from tax policy changes.

Econometrics

Uncover how Multinational Firms use Patent Transfers for Profit Shifting Activities
StatusActive
Effective start/end date1/01/18 → …

Fields of Science and Technology Classification 2002

  • 53 Economics