Taxation in a Global Digital Economy

1. S. 424IP Box Regimes – A Controversial Subject

1.1. Promoting R&D, Attracting Investment and Tax Competition as the Rationale for Patent Box Regimes?

Several recent developments such as Brexit, the announcement of President Trump in the United States to lower the corporate tax rate, and the competition of countries to provide the most attractive business environment in order to attract investments have prompted the discussion on the long claimed race to the bottom. Since intangible assets can be easily moved, countries tend to have an incentive to provide an attractive environment not only for research and development (R&D) activities but also for the exploitation of intellectual property (IP). In an attempt to counteract the trend, the Organisation for Economic Cooperation and Development (OECD) and the G20 have implemented the Base Erosion and Profit Shifting (BEPS) Project, and the European Commission released the Anti-Tax Avoidance Directive (ATAD) which is aligned with the recommendations of the BEPS Project and even goes further in some aspects. The former includes recommendations in Action 5 to introduce a substantial activity requirement for Intellectual Property box regimes (IP...