Patent box regimes have become increasingly popular as an instrument to attract taxable income from intellectual property (IP). This paper assesses the quantitative impact of patent box regimes on profit shifting by multinational enterprises (MNEs). We proxy the ability to access the tax benefit...

Recent empirical research documents a tendency of affiliates of multinational enterprises to bunch around zero reported profit. Setting up a model that allows for profitable and loss-making affiliates of multinationals, we show that profit shifting to a low-tax country as well as a loss-related,...