European Union - IP box regimes and multinational enterprises: Does nexus pay off?

Müller, Jessica ; Spengel, Christoph ; Steinbrenner, Daniela

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Document Type: Article
Year of publication: 2022
The title of a journal, publication series: World Tax Journal : WTJ
Volume: 14
Issue number: 1
Page range: 75-112
Place of publication: Amsterdam
Publishing house: IBFD
ISSN: 1878-4917 , 2352-9237
Publication language: English
Institution: Außerfakultäre Einrichtungen > Graduate School of Economic and Social Sciences - CDSB (Business Studies)
Business School > ABWL u. Betriebswirtschaftliche Steuerlehre II (Spengel)
Subject: 330 Economics
Classification: JEL: H21, H25,
Individual keywords (German): IP Box , Nexus , Forschungs- und Entwicklungsförderung , OECD , Internationales Steuerrecht
Keywords (English): r&d , IP box , patent box , nexus , OECD , international tax
Abstract: Over the last decades, the OECD and the European Union (EU) aimed at regulations that prevent aggressive intellectual property (IP) tax planning of multinational enterprises (MNEs). These regulations should stop the international race to the bottom of effective tax burdens. Contemporaneously, EU Member States enacted favourable tax systems for corporate research and development (R&D) activities in order to increase their location attractiveness. Especially, the output-oriented R&D tax incentives, namely IP box regimes, gained attention from a tax fraud perspective as well as popularity by national governments to generate public revenues. In this article, we qualitatively and quantitatively examine the European IP boxes. Thereby, we analyse their impact on IP tax planning and location attractiveness in light of the changes introduced by the OECD’s modified nexus approach. Our results demonstrate that even after introducing the nexus, a considerable reduction in effective average tax burdens is possible. Nonetheless, in line with the policy intention, the nexus effectively prevents excessive reductions of MNEs’ tax burden. Moreover, we account for changes in IP tax planning and observe implicit subsidies for the combination of output- and input-oriented tax incentives. Thus, these combinations reduce MNEs’ tax liabilities and finally, increase the location attractiveness in the post-nexus era.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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