Template-Type: ReDIF-Paper 1.0

Title: Innovation-friendly taxation of multinational enterprises: patents in the context of growth and taxes

Author-Name: Jan Luksic
Author-Name: Jorg Peschner
Author-Name: Giuseppe Piroli


Abstract: We find that patents registered by multinational enterprises (MNEs) in tax havens help avoid taxes in the EU but fail to increase the total factor productivity (TFP) of EU-located group members. We conclude that many of those patents' prime purpose is not to make technology available and then diffuse it smoothly within the group. It is rather to avoid taxes in the EU by shifting profits to low-tax offshore entities. We suggest that implementing a comprehensive system of withholding taxes on outbound royalty payments could reduce profit-shifting associated with patents, thereby fostering more innovative and efficient uses of intellectual property.


Classification-JEL: D24, F38, H21, H25, O32.
Keywords: Multinational enterprises, taxes, TFP, innovation.

Creation-Date: 2026-01-04

File-URL: http://www.eeri.eu/documents/wp/EERI_RP_2026_04.pdf
File-Format: Application/pdf

Number: EERI RP 2026/04
Handle: RePEc:eei:rpaper:EERI_RP_2026_04