Tax planning with intangibles has become one of the most popular and most vividly
debated topics in international taxation. We incorporate various intellectual property (IP) tax
planning models into forward-looking measures of effective tax rates, namely the disposal of
intangibles to low-tax subsidiaries, intra-group licensing arrangements, and intra-group
contract R&D. In doing so, we draw upon the methodology put forward by Devereux and Griffith
and amend this model by considering a research & development (R&D) investment which is
carried out by a parent company, whereby the resulting intangible is exploited by a foreign
subsidiary. We point out analytically under which conditions IP tax planning achieves the
objective of reducing the effective average tax rate of the group. We find that the disposal of
intangibles to low-tax subsidiaries does not achieve this tax planning objective, if the true
value of the asset is subject to tax upon the disposal. We show to what extent the parent must
understate the value of the intangible in order to reduce the group’s tax burden. We
furthermore point out that contract R&D may generally achieve a significant lower effective tax
burden. We present cost of capital and effect average tax rates to illustrate these findings.
Dieser Eintrag ist Teil der Universitätsbibliographie.
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