Should there be lower taxes on patent income?

Fabian Gaessler, Bronwyn H. Hall, Dietmar Harhoff

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


A “patent box” is a term for the application of a lower corporate tax rate to the income derived from the ownership of patents. This tax subsidy instrument has been introduced in a number of countries since 2000. Using comprehensive data on patents filed at the European Patent Office, including information on ownership transfers pre- and post-grant, we investigate the impact of the introduction of a patent box on international patent transfers, on the choice of ownership location, and on innovative activity in the relevant country. We find that the impact on transfers is small but present, especially when the tax instrument does not contain a development condition and for high value patents (those most likely to have generated income), but that innovation as proxied by R&D and patents is not affected. We also find that introducing a patent box reduces patent transfers out of the country. These results call into question whether the patent box is an effective instrument for encouraging innovation in a country, rather than simply preventing or facilitating the shifting of corporate income to low tax jurisdictions.

Original languageEnglish
Article number104129
JournalResearch Policy
Issue number1
StatePublished - Jan 2021
Externally publishedYes


  • EPO
  • IP box
  • Patent box
  • innovation tax
  • invention incentive
  • patent ownership


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