Patent boxes and the success rate of applications

Arbeitspapier

Patent boxes significantly reduce the corporate tax rate applied to income earned from a patent. This incentivizes firms to increase the likelihood of a patent application being granted by creating more novel research and using more successful legal representation when filing the application. Conversely, it supports submitting applications for marginally novel innovations that otherwise would not have been submitted, lowering the probability of success. We use data from applications to the European Patent Office from 1978 to 2019 and find that the introduction of a patent box increases the average success rate of applications from large, corporate innovators by 6.9 percentage points. This impact only materializes two years after a patent box takes effect, suggesting that improved research effort is the dominant response by firms. Therefore patent boxes may help to increase innovation novelty and improve the overall quality of research.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: UCD Centre for Economic Research Working Paper Series ; No. WP21/09

Classification and Topics

• Classification: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; Innovation and Invention: Processes and Incentives ; Management of Technological Innovation and R&D
• Subject: Patent Box ; Patents ; Application Success ; Corporate Taxation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Davies, Ronald B. ; Kogler, Dieter F. ; Hynes, Ryan
• Event: Veröffentlichung
• (who): University College Dublin, UCD Centre for Economic Research
• (where): Dublin
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/237587
• Last update: 10.03.2025, 11:41 AM CET